Oil slides more after USA settlement on API inventory report

"But on the other hand it could indicate some increasing resistance by certain OPEC or non-OPEC countries for an extension to the end of the year as they were planning an increase of production in the fourth quarter", he said. However, still-large inventories and higher output from some producers such as the United States - which is not participating in the supply accord - have limited the rally.

Brent crude futures LCOc1 traded at $54.92 per barrel, while the US West Texas Intermediate (WTI) crude futures CLc1 also remained nearly unchanged from the last close at $52.43 a barrel, reported Reuters. US production rose to 9.252 million barrels a day in the most recent week, highest since August 2015. Benchmark Brent crude has gained about 19 per cent since the agreement, which took effect in January, and was 17 cents higher at US$55.06 (RM241) a barrel at 10.22am in London.

"The rebalancing in USA crude stocks may have got under way, but concerns of further gasoline builds are rife even as the US summer driving season shifts up a gear", said Stephen Brennock, an analyst with PVM Oil Associates.

Gasoline stocks posted a counter-seasonal build of 1.5 million barrels.

The US government's Energy Information Administration Wednesday reported a drawdown in commercial crude inventories for the week ended April 14, which should have been a bullish influence, but was overshadowed by a bearish build of 1.57 million barrels in gasoline stocks, against analyst expectations of a 2-million-barrel decline. Gasoline margins have since come under downward pressure, which analysts warned could undermine crude prices as well. "Refinery maintenance is finishing, which is leading to greater processing of crude, and the OPEC cuts are going to finally have an impact on USA inventories". WTI si now trading at $51.2 per barrel and Brent at $2.1 per barrel premium to WTI.

"Oil producers would need to extend the historic agreement to curb global overspply through and until the end of 2017 for oil prices to surge", CNBC reported, citing the bank's report, "amid concerns Russian Federation is lagging behind on its pledged production cuts". Gasoline was also trading down 0.38% at $1.713. "Production is up nine straight weeks here to the highest level since August 2015".

For distillate inventories including diesel, the EIA reported a drop of 2.0 million barrels.

He said "conformity" within OPEC and other producers was improving and that the UAE was complying 100 % with its pledge to cut production.

The declines are welcome news after steady gains earlier this year that pushed petroleum inventories to record levels.

  • Zachary Reyes