Oil eases, near weakest since late March on small US stocks decline
- Author: Zachary Reyes May 06, 2017,
May 06, 2017, 0:16
S&P Global Platts said US oil has become more price-competitive, with West Texas Intermediate offered at a discount to Dubai crude, the main benchmark for Middle East supply to Asia.
"Evidence is mounting that the OPEC agreement, and the market's reaction, were much ado about nothing", John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by telephone. Though this is the fourth consecutive drop in crude stockpiles, traders are anxious that the OPEC and its allies are not able to do enough to end the supply glut.
Crude closed near a six-week low in NY after US inventories declined by less than analysts projected.
Russian Federation thinks it will be necessary to extend its agreement to cut oil output in conjunction with Opec beyond June, Energy Minister Alexander Novak said in an emailed statement on Thursday.
US output has been on the rise in recent months, touching production levels not seen since August 2015, according to Bloomberg.
Government data showed a modest decline for US crude inventories and another unexpected increase in gasoline supplies as hopes about summer gas demand are frail.
"It is now-or-never for oil bulls", said USA commodity analysis firm The Schork Report on Friday.
USA crude production rose to 9.29 million barrels last week, the highest level since August 2015, according to the Energy Information Administration.
Oil prices have been under pressure amid a chronic global glut of the black liquid, with variances in EIA and API data causing whipsawing in prices. Prices fell to as low as $46.64, the lowest since November 30.
United States production "could go pretty high", Hamm said in March at the CERAWeek by IHS Markit conference in Houston, one of the largest gatherings of oil executives in the world.
Early losses fueled by technical selling accelerated after OPEC sources told Reuters that the cartel was unlikely to make cuts deeper.
But that has been offset by more pumping from Libya and Nigeria, two nations exempt from the OPEC deal. Just look at how the tally of USA oil rigs has more than doubled from a year ago.
"Commodities are getting pounded and the dollar, in which gold is denominated, is gaining traction after the Federal Open Market Committee (rate decision)". Production there has been stronger than expected. That was less than half the forecast draw of 2.3 million barrels.
He also pointed to how more fuel-efficient cars coming off the lot continue to guzzle less gas than the old ones they're replacing.
"Any likelihood of an increase in the level of cuts remains slim with Opec officials playing down this possibility", said James Woods, global investment analyst at Rivkin Securities.
"Now it seems as though that extension will have to move into 2018 as well", said Vincent Piazza, a senior analyst at Bloomberg Intelligence.