Oil Prices Steady Despite Lingering Supply Worries
- Author: Zachary Reyes Mar 29, 2017,
Mar 29, 2017, 19:54
LONDON, March 16 (Reuters) - Oil prices rose for a second day on Thursday, supported by U.S. data showing crude inventories had dipped after rising for nine weeks and a weaker dollar after the U.S. Federal Reserve signalled it would not hike rates faster than expected.
That compared with analysts' expectations for an increase of 3.7 million barrels.
Latest data from market intelligence firm Genscape showed a build of more than 2 million barrels in the week to March 14 at the Cushing, Oklahoma delivery point for US crude futures, traders said. The API data also showed a fall of 3.9 million barrels in gasoline supplies and a drop of 4.1 million barrels in distillates, sources said.
The increase is the product of "relentless" supply growth in the latter stages of past year, particularly from OPEC countries that pumped at record levels, and from the USA shale oil basin, where drilling activity began picking up 10 months ago. Prices fell 68 cents to $47.72 Tuesday, the lowest close since November 29.
U.S. crude prices settled down 1.4 per cent at US$47.72 a barrel, touching their lowest point since Nov 30.
The market as well has been impressed with OPEC's level of compliance with the cuts and these are likely to hold, BMI Research said.
Oil prices slid to three-month lows after OPEC reported a rise in global crude stocks and a surprise jump in production from its biggest member, Saudi Arabia, despite output curbs by the group. Oil futures had been on the rise after USA government data showed the first decline for domestic-crude stockpiles in 10 weeks.
US West Texas Intermediate crude was also down $1.08, or 2.2 per cent, to $47.32 per barrel.
"Saudi Arabian Energy Minister Khalid Al-Falih continued to express concern about high global inventories", ANZ said in a note. At the end of November, the Organization of Petroleum Exporting Countries agreed to cut output by 1.2 million barrels per day (bpd) from January 1, initially for a period of six months.
WTI prices, which were already climbing following data showing an unexpected decline in weekly USA crude stockpiles, gained even more ground when the Fed announced a decision (http://www.marketwatch.com/story/fed-raises-interest-rates-by-a-quarter-point-sees-two-move-moves-this-year-2017-03-15) to raise its benchmark short-term interest rate by a quarter-point and signaled two more rate hikes this year.
"Surplus inventories and rising USA production may be more of a worry to them".
Brent LCOc1 futures were up 64 cents, or 1.3 percent, at $51.56 a barrel by 1:15 p.m. EDT (1715 GMT), its first increase in seven days.
An OPEC report released Tuesday said that Saudi Arabia reported an increase in oil production for February, saying it pumped 10.011 million bpd last month, up from 9.748 million bpd in January.
But in its monthly report OPEC said oil stocks in industrialized nations rose in January to stand 278 million barrels above the five-year average, of which the surplus in crude was 209 million barrels and the rest products.