US Stockpile Keeps Oil Prices Down
- Author: Zachary Reyes Jun 10, 2017,
Jun 10, 2017, 1:52
- US oil prices slid 5 percent on June 7 to a one-month low, after an unexpected increase in USA inventories of crude and gasoline fanned fears that output cuts by major world oil producers have not done much to drain a global glut.
Futures fell as much as 4.7 percent in NY after the Energy Information Administration said American crude supplies rose by 3.3 million barrels last week, following eight straight weeks of declines.
US light crude prices CLc1 were at $47.69 per barrel, down 50 cents.
The price of Brent Crude fell 4.1% to $48.06 a barrel, its lowest level since November while West Texan Intermediate declined 5.1% to $45.72 a barrel. Mr. Jakob said that this is usually the tightest time of year in terms of strong demand, along with lower supply from Saudi Arabia due to seasonal factors, therefore USA stocks weren't expected to build.
As concerns about supply persist, US drillers have added rigs for 20 straight weeks, the longest streak in at least three decades, undercutting efforts by the OPEC to cut production and eliminate a global glut.
Earlier that same month, Saudi Aramco said it would cut crude supplies to China, South Korea, and South East Asia by 1 million barrels each.
In late May, Riyadh announced its plans to purposely reduce exports to the United States to force a reduction in the latter's sizeable inventories, which are preventing a greater rise in global oil prices, according to Saudi Oil Minister Khalid Al-Falih. Gasoline demand was down 591,000 barrels a day, down from the expected record and we may have seen a drop due to crummy weather in the Northeast for the Memorial Day weekend.
U.S. stockpiles grew by 3.3 million barrels in the week ending June 2, while the market had expected a 3.5 million barrels decline, the Energy Information Administration said.
Crude futures edged up in early Asian trading on Thursday following heavy losses in the previous session after official data showed that USA inventories rose for the first time in 10 weeks, reawakening concerns over a glut. Some were concerned about rising production from Libya and Nigeria, which are exempt from the agreement.
Analysts said Qatar's isolation caused trade disruptions that offered some support for oil prices.
But analysts believe production could hit the key mark this year.