Price Of Crude Oil Dips On Supply Glut Concerns

A petro-industrial factory is reflected in a traffic mirror in Kawasaki near Tokyo

A petro-industrial factory is reflected in a traffic mirror in Kawasaki near Tokyo

Oil prices were largely flat on Thursday after steep losses the previous session, with rising USA production weighing against comments from leading Gulf oil producers that an extension to OPEC-led supply cuts was likely. Brent crude settled down 3.6 percent, or $1.96 a barrel, to $52.93.U.S. crude stocks fell 1 million barrels in the latest week, the U.S. Energy Information Administration said, a smaller draw than expected.

OPEC members Saudi Arabia and Kuwait signaled that an effort by the Organization of the Petroleum Exporting Countries and other producers, including Russian Federation, to cut oil output was likely to be extended beyond June.

Still, Saudi energy minister Khalid al-Falih on Thursday said a preliminary agreement to continue cuts for another three or six months is within reach and could be approved at OPEC's next meeting on May 25.

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

"I think they will keep the same level if the deal is extended", Almarzooq, who chairs the committee monitoring the cuts, said Wednesday in an interview in Abu Dhabi, Bloomberg reported. "We're getting a little bit of price recovery, but it's still not enough to reverse the shale threat". USA crude inventories were at 532.3 million barrels, only about 3 million barrels less than the record reached in March.

"The market sentiment appears to be that the increase in USA shale production outweighs the OPEC action and the market is keeping the loss we had yesterday", he said.

Latest data from the Energy Information Administration showed USA output rose to 9.25 million barrels a day last week, the highest level since August 2015.

Crude inventories fell by 1 million barrels in the week to April 14, compared with analysts' expectations for an decrease of 1.5 million barrels.

"Rising oil output in the USA remains the predominant bearish factor for prices despite growing anticipation that OPEC will extend a self-imposed cap on its oil production in the upcoming May meeting", Abhishek Kumar, senior energy analyst at Interfax Energy Global Gas Analytics said recently.

US gasoline stocks posted a counter-seasonal build of 1.5 million barrels, despite heavier refining activity.

North Korean state media warned the United States of a "super-mighty preemptive strike".

Patrick Pouyanne, the chief executive of French oil and gas giant Total, said on Thursday prices could fall again by the end of the year due to a rapid increase in USA shale production.

"Saudi's done a good job of managing the rhetoric", said Michael Hiley, a trader at LPS Futures LLC.

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