Oil steady on Libya disruptions, bloated USA stockpiles

A high degree of compliance from Opec and non-Opec producers has, at this stage, been priced into the market, while the upside is increasingly being capped by signs of rising production from U.S. shale oil producers.

Refinery runs rose 329,000 barrels per day as utilization rates jumped 2.3 percentage points to 87.4% of capacity, led by higher runs at Gulf Coast and Midwest refiners.

US crude closed up 2.4% to $49.51 per barrel.

May Brent oil LCOK7, -0.49% on London's ICE Futures exchange shed 26 cents, or 0.5%, to $52.87.

West Texas Intermediate, the USA benchmark for the price of oil, was up 0.8 percent to $49.89 per barrel. More critically, there are ongoing concerns about the scale of the recovery in USA shale production, which could undermine the cuts.

Energy services provider Baker Hughes Inc. reported Friday that active US oil rigs rose for the eleventh consecutive week.

I say yes. Because if we look at supply in terms of daily demand coverage and the fact that the USA can export oil, which it could not before, gives the impression that supply is higher than it is.

Front-month Brent crude futures rose 25 cents to $51.58 a barrel by 1217 GMT, while West Texas Intermediate (WTI) crude futures were up 22 cents at $48.59 a barrel.

We believe the current narrative driving down oil prices is that the USA will be growing oil production too fast which is actually bullish near-term for pipelines volume and the midstream more generally.

Saudi Arabia and some Gulf State oil producer-allies appear likely to extend the six-month oil production cut that expires in June, according to SGH Macro Advisors.

Traders said supply disruptions in Libya were lifting the market and that falling USA gasoline inventories pointed to a tightening market there despite record crude stocks.

Another selloff in oil prices could blast through what is left of bullish support as Brent crude oil future is testing an area of support created by the 200-day simple moving average and trend line from $50.74 to $50, Bank of America Merrill Lynch said.

While the short-term money may be going into quick turn-around United States projects, many analysts say the lack of investment in recent years has added greater risk to the prospect of a supply crunch in the future.

Crude oil rose sharply last week, bolstered by speculation that members of the Organization of the Petroleum Exporting Countries (OPEC) are planning to extend production cuts for longer than initially planned. They slid last week to the lowest since November as American supply gains countered output cuts by other producers.

The beginning of Q2 is setting up to be important for Oil traders to watch given what's happening behind the price, which could determine if Crude Oil turns lower or much higher over Q2.

The increase to 54 May cargoes from 52 in April, or 1.61 million bpd, came in part from rising exports of Bonga and Antan, both of which were hit earlier in the year for scheduled maintenance.

Compliance of 95 percent is higher than OPEC achieved in its last cut in 2009, Reuters surveys show.

  • Leroy Wright