Junio 24, 2017

Oil hits six-week low as Opec fails to curb oversupply

18 Junio 2017, 06:57 | Dolorita Barahona

USA crude oil inventories are still above historic norms — CHART

Global oil output sees slowest growth since 2013

US West Texas Intermediate (WTI) crude futures were down 8 cents, or 0.2 per cent, at $44.38 per barrel. OPEC's own compliance with the cuts has been questioned, and the producer group said in a report this week that its output rose by 336,000 bpd in May to 32.14 million bpd.

Petroleum prices extended losses on Wednesday after USA government data showed a smaller-than-expected drop in stockpiles of US crude as refineries hiked output.

The weakness on the supply side was driven by non-OPEC production which fell by 0.8 Mb/d, its largest decline for nearly 25 years, said the report.

The EIA reports that the price of oil over the course of quarter three may lead to possible increases in price over the next few months of this year.

Oil inventories have remained high several months into a deal by OPEC producers with non-member nations to reduce supply by 1.8 million bpd.

"We need to see a sign that the OPEC cuts are having an impact on world oil supplies and it's clearly not, at least not yet", said Tamar Essner, lead energy analyst at Nasdaq.

Gasoline stocks rose 2.1 million barrels, or 0.9 percent, to 242.4 million barrels, for the week ending June 9, Energy Information Administration (EIA) data showed.

The EIA released its monthly report on drilling activity Monday showing that oil production from seven major US shale plays is projected to rise by 127,000 barrels a day to 5.475 million barrels a day in July from June.

The IEA said yesterday it expected growth in non-Opec supply to be higher next year than growth in overall global demand.

Light, sweet crude for July delivery slid US$1.73, or 3.7 percent, to US$44.73 a barrel on the New York Mercantile Exchange, snapping a three-session winning streak and closing at the lowest level since November 14. Both benchmarks notched a weekly loss exceeding 1.6 percent.

Libyan output will reach 900,000 barrels a day within days, National Oil Co. said on its website, citing Chairman Mustafa Sanalla.

Rising non-Opec output has dented Opec and its allies' global pact to reduce oversupply in the market, which has pressured prices for almost three years.

Shale oil production is expected to continue growing in the U.S. The number of operating rigs there has increased for 21 straight weeks, according to oil field services company Baker Hughes.

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