Oil prices edge lower as rebound in Libyan production weighs
- Author: Zachary Reyes Apr 06, 2017,
Apr 06, 2017, 18:19
Futures in NY were holding losses after dropping 0.7 percent on Monday, following a 5.5 percent jump last week.
USA oil may drop to $49.62 per barrel as it failed to break a resistance at $50.95, said Wang Tao, a Reuters market analyst for commodities and energy technicals. The industry-funded American Petroleum Institute will release its weekly data Tuesday. Last Friday, the agency reported the increase of USA crude production to 60,000 barrels per day in January after the output curb in December.
Oil futures came under renewed pressure on Monday (4 April) on news of a rebound in production in war-torn Libya, which countered market chatter in favour of Opec extending its production cut by another six months from June.
The oil market continues to look for signs of a tightening market as concerns linger that compliance with producer-led output cuts remains insufficient to erode a supply glut and the USA raises oil output. In other words, when the option market has significantly changed its "view" on the likely future direction of the oil price, it seems to have a tendency to be proved wrong; although typically with a lag of several months.
West Texas Intermediate for May delivery was unchanged at $50.24 a barrel on the New York Mercantile Exchange at 10:17 a.m.in Singapore. That's the highest closing price in 4 weeks. Total volume traded was about 35 per cent below the 100-day average.
China's crude imports from the Americas, led by Brazil, Venezuela and Colombia, hit 5.61 million tonnes (1.3 million bpd) in March, the highest in Reuters' data going back to 2006.
Buzzard produces about 180,000 barrels per day.
David Pursell, a managing director at investment bank Tudor Pickering Holt & Co., sees crude reaching $65 a barrel in the fourth quarter and $75 in 2019. Previously, US crude stocks stood at 1.91 million barrels while gasoline stocks and distillates dropped by 1.10 million barrels and 2.04 million barrels respectively. Sources said the repairs would take one to two days. This is according to Mohammad Barkindo, who is the Secretary-General of OPEC.
In the last quarter of 2016, OPEC and non-OPEC members agreed to cut global crude production by around 1.8mn bpd to ease global gut and support prices.
With the USA summer driving season approaching, the short-term focal point should not be on oil inventories, but rather on product inventories and refinery margins, known as crack spreads.
OPEC ministers will meet in May to decide whether or not to extend the oil supply curbs beyond June.