SK Innovation sees oil prices staying low, eyes U.S. crude

Brent crude futures, the worldwide benchmark for oil prices, were at $51.72 per barrel at 0155 GMT, down 12 cents, or 0.2 percent, from their last close.

Global benchmark, Brent crude fell 87 cents, or 1.7 per cent, to $51.42 a barrel, while United States light crude was 59 cents, or 1.2 per cent, lower at $49.21.

USA crude stocks fell sharply last week, driven by a surge in refining and exports to record highs, while gasoline inventories also dropped sharply ahead of the start of the summer driving season, the Energy Information Administration (EIA) said June 1.

Meanwhile, all eyes will be glued to Thursday's U.S. Energy Information Administration report on stockpile futures.

Crude inventories fell 6.4 million barrels in the week to May 26, far more than analysts' expectations for a decrease of 2.5 million barrels.

Brent oil tumbled below $50 on Friday, heading for a second straight week of losses, on worries that U.S. President Donald Trump's decision to abandon a climate pact could spark more crude drilling in the United States, worsening a global glut.

"A decrease in production under an agreement between OPEC and non-OPEC could largely be balanced out by an increase in US shale oil production by the middle of 2018", Rosneft Oil Co.

Oil prices fell by one percent on Wednesday, as rising output from Libya added to concerns about increasing USA production that is undermining OPEC-led production cuts aimed at tightening the market, Reuters reports.

Sechin, a close ally of President Vladimir Putin, expects shale oil output to increase by about 1.5 MMbpd in 2018, close to the entire cut targeted by the Organization of Petroleum Exporting Countries and its allies including Russian Federation. The U.S. benchmark also fell for a third month in May, declining 2 percent.

US exports of petroleum products rose to 4.9 million bpd, and on average, exports are up more than 31 percent year-over-year.

The Secretary General of OPEC, Mohammed Barkindo, believes it is too early to discuss ending the exemption from the oil production cut deal that Libya and Nigeria have been benefiting from, boosting their crude oil output in the last few months.

The price of oil has continued its downward move despite an agreement between the OPEC and participating N-OPEC producers to extend the current supply cut agreement that aims to reduce global oil supply by 1.76 million barrels per day.

Today's falls in oil extended those seen on Tuesday, when bears sold on doubts that cartel Opec's extended production cuts would alleviate the global glut.

However, U.S. crude production rose to 9.34 million bpd last week, up almost 500,000 bpd from a year ago.

"The lack of moderation in USA production is undercutting OPEC efforts to manage the market", said Michael McCarthy, a chief strategist at CMC Markets in Sydney.

There's been modest crude output growth in the Gulf of Mexico, but that production mostly offsets declines seen in conventional oil fields, according to Rystad.

  • Zachary Reyes