Don't Believe The Hype: Oil Markets Far From Recovery

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Benchmark Brent crude futures were down 56 cents at $55.33 at 0618 GMT (2:18 a.m. ET).

"With a continuation of the Opec and non-Opec producer deal in the second half of 2017 and the expected associated inventory draw-down, we expect oil prices to move above $60 a barrel by the second half of the year", the analysts wrote in the note.

Under the deal, OPEC is curbing its output by about 1.2 million barrels per day from January 1 for six months in an attempt to eradicate a supply glut.

US West Texas Intermediate (WTI) crude futures were up 32 cents, or 0.63 per cent, to $50.76 a barrel.

The Organization of Petroleum Exporting Countries said in a report a day earlier that inventories shrank in developed nations during the first quarter, while forecasting that rivals in the U.S. shale industry will boost output.

OPEC and non-OPEC producers said after talks in Kuwait last month that they were looking into extending the output cuts, as compliance with the agreement has increased.

Brent crude futures dipped 18 cents at US$54.71 a barrel as of 11:16 a.m. ET, while USA crude futures lost 19 cents to US$52.22 a barrel.

Oil had rallied above $53 a barrel after some members of the Organization of Petroleum Exporting Countries voiced support for prolonging cuts past June, but rising US output is undermining the effort to trim a global glut. Crude stocks declined 1.034 million barrels to 532.343 million barrels in the week ended April 14, EIA data showed Wednesday.

US inventories now sit at 532.3 million barrels, only down about 3 million units from the record reached in March.

The continued growth in USA production and the rise in stockpiles forced the market to respond bearishly based on the increased inventory outlook.

United States petrol stocks posted a counter-seasonal build of 1.5-million barrels, because of rising refining activity.

US supplies of crude are still near records and more than 100 million barrels higher than the five-year average for this time of the year, data compiled from the EIA show.

The Organisation of the Petroleum Exporting Countries (OPEC) is confident that production cuts agreed with non-members to prop up prices will lead to a recovery in the market, its chief said on Wednesday.

At a press conference in the United Arab Emirates, Saudi Energy Minister Khalid al-Falih said that "there is consensus building but it's not done yet".

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