Home / Energy/ Oil loses ground as rising US output threatens to disrupt tightening market

Oil loses ground as rising US output threatens to disrupt tightening market


Comments / {{hitsCtrl.values.hits}} Views / Friday, 23 March 2018 00:00


SINGAPORE (Reuters): Oil prices gave up earlier gains as the relentless rise in U.S. crude production threatens to undermine efforts led by producer cartel OPEC to tighten the market.

Brent crude futures were at $69.34 per barrel at 0750 GMT, down 13 cents, or 0.2% from their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $65.13 a barrel, down 4 cents from their previous settlement.

Both benchmarks on Wednesday hit their highest levels since early February, having risen around 10% from March lows.

An overall mood of confidence in the oil market is being tempered by U.S. crude production <C-OUT-T-EIA>, which climbed to a fresh record of 10.4 million barrels per day (bpd) last week, putting the United States ahead of top exporter Saudi Arabia and within reach of Russia’s 11 million bpd.

Despite the relentless rise in U.S. output, up by almost a quarter since mid-2016, traders said oil markets remain well supported.

In a sign of healthy demand, U.S. crude inventories fell 2.6 million barrels in the week ended March 16 to 428.31 million barrels, the Energy Information Administration (EIA) said late on Wednesday.“Inventory data for last week showed a surprise crude draw as well as significant drawdowns in both gasoline and distillates inventories,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.

Dutch bank ING said the drawdown in U.S. crude inventories was down to a fall in imports by around 500,000 barrels per day (bpd) to an average 7.08 million bpd last week, and a rise in exports by 86,000 bpd to an average 1.57 million bpd. Also, refinery utilisation rates rose above 90% for the first time since early February.

Further supporting oil prices has been supply restraint led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia, which started in 2017 and is scheduled to go on for the rest of 2018. OPEC said on Wednesday the cuts were close to having the desired effect of bringing down global inventories to five year averages, although it gave little detail.

U.S. bank Goldman Sachs said OPEC was “likely to overshoot on the inventory rebalancing”, and as a result, it saw Brent reaching $82.50 per barrel by mid-year.”


Share This Article


DISCLAIMER:

1. All comments will be moderated by the Daily FT Web Editor.

2. Comments that are abusive, obscene, incendiary, defamatory or irrelevant will not be published.

3. We may remove hyperlinks within comments.

4. Kindly use a genuine email ID and provide your name.

5. Spamming the comments section under different user names may result in being blacklisted.

COMMENTS

Today's Columnists

Economic and regional issues upstage Hindutva plank in Indian State elections

Saturday, 15 December 2018

Results of the recently-concluded State Assembly elections in Rajasthan, Madhya Pradesh, Chhattisgarh, Telangana and Mizoram show that economic and regional issues have upstaged “Hindutva” – the ideology of the ruling Bharatiya Janata Party (BJ


Rationality of Sirisena’s irrationality

Saturday, 15 December 2018

Man becomes a little cog in the machine, and, aware of this, his one preoccupation is to become a bigger cog said Max Weber, the founding father of sociology. Maithripala Sirisena became a small cog after the 19th Amendment. Then he decided to be a b


The Pinguttara of our politics

Saturday, 15 December 2018

Tale of Pinguttara There is an interesting piece in the LankaEnews of 13 December that refers to President Maithripala Sirisena as a ‘Pinguttara.’ I like to pick up that idea and develop on that. ‘Pinguttara,’ is a term that is ascribed to so


Overcoming the crisis: The second freedom struggle

Friday, 14 December 2018

The crisis that has been developing in Sri Lanka, manifesting itself in varied forms at different times since independence, has now taken the form of a constitutional crisis, threatening the survival of the Sri Lankan State. Regardless of the Court


Columnists More