Oil dips on glut concerns, but Mideast tension, falling US stocks support
- Author: Zachary Reyes Jun 08, 2017,
Jun 08, 2017, 19:36
August Brent crude also fell down 1% or 48 cents closing in at $49.47 per barrel which was the benchmark's lowest settlement in the past month.
The US Energy Information Administration (EIA) said on Tuesday US crude oil production could hit a record 10-million barrels a day next year, up from 9.3-million barrels a day now, putting it almost on a par with top exporter Saudi Arabia.
The 3.3M-barrel build in USA commercial oil inventories marked the first increase in 10 weeks and raised concerns over the effectiveness of the OPEC production cut agreement.
Opec has pledged to cut nearly 1.8-million barrels a day to help reduce global inventories to their five-year average. Distillate product supplied averaged over 4 million barrels a day over the past four weeks, up by 1.8% compared with the same period previous year.
USA stocks of crude oil and gasoline surprisingly rose last week as refinery runs declined and exports fell, official data showed on Wednesday.
Adding to concern about supply outstripping demand, Royal Dutch Shell on Wednesday lifted force majeure on exports of Nigeria's Forcados crude, bringing all the country's oil grades fully online for the first time in 16 months.
"The fact of the matter is there's more than adequate gasoline to get through the summer driving season, and refiners continue to run at near-record throughputs, which will keep supplies from drawing precipitously", said Andrew Lipow, president of Lipow Oil Associates.
Oil prices rallied sharply during the U.S. session on Tuesday with WTI moving back above the $48.0 p/b level with anticipation that there would be a further decline in oil inventories.
The growing tension between Qatar and other OPEC members could undermine the OPEC deal.
US total crude and products supplies jump by most since 2008.
Crude staged a mild rebound in Asia on Thursday after a drubbing overnight, but still faces a heavy minefield of risk from upcoming China trade data to political winds from elections in the United Kingdom and testimony to Congress by the fired Federal Bureau of Investigation chief James Comey and continuing diplomatic tension between Qatar and key Arab nations.
The announcement comes after the Organization of the Petroleum Exporting Countries have come up with an agreement to extend oil production cuts by nine months to further help push oil prices up and avoid global oversupply. Iran's production rose on higher exports to 3.78 million b/d, the survey found, just below its quota of 3.797 million b/d.
Some analysts saw a risk that rivalries between OPEC members could weaken the production cut agreement. Diesel futures fell 2.36 cents, or 1.59%, to $1.4612 a gallon.
Here is a look at how share prices for two blue-chip stocks and two exchange traded funds reacted to this latest report.