Oil rises even as global supply tightens
- Author: Zachary Reyes Apr 06, 2017,
Apr 06, 2017, 22:53
Meanwhile, Nymex reformulated gasoline blendstock for May RBK7, -0.59% -the benchmark gasoline contract-fell 0.31 cent to $1.7061 a gallon and May heating oil HOK7, -0.50% rose 0.5 cent to $1.5806 a gallon. That, however, was up 29 cents from Friday's close when May was still the front-month, making it the highest close for the contract in almost four weeks.
U.S. West Texas Intermediate crude futures climbed 10 cents, or 0.2 percent, to $50.70 a barrel after settling 25 cents higher in the previous session. Sharara's production resumed Sunday, with output at 160,000 barrels a day, according to the person familiar.
OPECstruck an agreement among members and non-members to limit their collective output to support oil prices.
Oilfield services firm Baker Hughes (NYSE:BHI) reported its weekly US rig count Friday, rose by 10 to 662; it was the eleventh straight weekly increase, which fuelled concerns that the rise in USA production would likely remain robust. The first quarter was the strongest for rig additions since the middle of 2011.
Manufacturing data showed factories across much of Asia posted another month of solid growth in March. Data also showed that China's factories production expanded for the ninth month in a row. Although these have since reopened, the political situation in Libya remains highly unstable, and future disruptions to oil supply are very likely. At 398.08 million barrels of net long positions as of March 28, hedge funds and other "money managers" were down 20 million barrels from a week ago and 158.53 million barrels below their historic high of February 21.
Since then, the price for a barrel of oil has jumped less than $10, and much of the blame for this muted response falls on the shoulders of US shale producers, which have taken advantage of petrostate supply cuts to increase their own production. Total Libyan production is said to be now 660,000 barrels a day.
Investors remained hopeful that OPEC and non-OPEC members would extend the current deal to cut production beyond June, after comments from several ministers from oil producing nations supported the idea of an extension.
Traders said that slowly tightening market conditions were driving price rises, with the Organization of the Petroleum Exporting Countries (OPEC) leading an effort to cut output.
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.