Crude price drop is symptom of rising United States clout

Qatar with a production capacity of about 600,000 barrels per day (bpd) is one of OPEC's smaller oil producing nations. U.S. crude oil (UCO) (FXN) (SCO) prices fell in post-settlement trade on June 6, 2017, despite the fall in inventories. The loonie was down 0.39 to 74.01 cents US.

With Saudi Arabia remaining the de facto leader and the largest producer in OPEC, any change in Qatar's production, whether a reduction or increase, will only have a limited impact on the fundamentals of supply and demand.

American crude production will average more than 10 million barrels a day in 2018, breaking a record nearly five decades old, according to the EIA's monthly Short-Term Energy Outlook report Tuesday.

Brent crude was trading at US$49.27 per barrel at 0424 GMT, down 20 cents, or 0.4 per cent from its last close.

The Canadian dollar, which is closely tied to movements in oil prices, traded lower on Wednesday. This was completely opposite the forecast for a decrease of 3.5 million barrels.

The Energy Information Administration reported on Wednesday that United States crude stockpiles climbed 3.3M barrels in the week ended June 2, following the preceding week's drop of 6.4M barrels.

"The market is still awash in oil, and it's waiting to see more concrete signs of global oil inventories declining", said Andy Lipow, an oil market analyst in Houston.

"Increased drilling activity in US tight oil basins, especially those located in Texas, is the main contributor to oil production growth, as the total number of active rigs drilling for oil in the United States has more than doubled over the past 12 months", EIA acting Administrator Howard Gruenspecht said in a statement.

Oil declined as US industry data showed gasoline stockpiles expanded at a time they typically fall, while Nigeria pressed on with the resumption of a key export grade.

In the United States, official inventory data from the EIA will be published on Wednesday, with expectations of a fall in stockpiles. Libya and Nigeria's combined January-May average output of 2.312 million barrels per day is now 101,000 barrels per day higher than their October levels, the benchmark month against which the rest of OPEC members' cuts are determined, according to the S&P Global Platts survey.

There are already doubts the effort to curb production by nearly 1.8 million bpd is seriously denting exports.

  • Carolyn Briggs