Crude drifts a tad weaker in Asia ahead of United States rig count

The American Petroleum Institute published industry reports on USA energy levels, finding crude oil stockpiles increased by 2.8 million barrels and gasoline stockpiles increased by 1.8 million barrels last week.

At 242.4 million, USA gasoline inventories were 9 percent higher than the five-year average as demand was down 1.2 percent over the last four weeks when compared with a year ago, according to EIA.

Global oil production rose by only 0.4 million barrels per day (Mb/d) in 2016, the slowest growth since 2013, according to the BP Statistical Review of World Energy. U.S. West Texas Intermediate (WTI) crude futures are at $44.49 per barrel, up 0.07 percent.

The commodity struggle to get by this week as OPEC countries and non-OPEC participating countries also reported an increasing oil production despite the pledges to extend the global output cuts.

The International Energy Agency says it expects oil supplies next year to outpace demand despite consumption hitting 100 million bpd for the first time. The oil price has declined more than 10 percent since the May agreement.

The International Energy Agency is forecasting USA output to grow by 620,000 bpd in 2017, compared with a prediction that production would be flat in its November assessment.

OPEC and other producers have agreed to restrict output and cut production by 1.8 million bpd to March next year to soak surplus crude from the market.

Saudi Arabia, which has voluntarily cut production below its OPEC target, told OPEC it lowered output further by about 66,000 bpd in May to 9.88 million bpd.

In a report on Wednesday, the International Energy Agency said rising USA output will contribute to supply growth exceeding demand growth in 2018.

Oil prices dropped to six-week lows on Thursday, under pressure from high global inventories and doubts about OPEC's ability to implement agreed production cuts. Prices slid $1.72, or 3.5 percent, to $47 on Wednesday.

"The outlook for oil hinges on the effectiveness of the OPEC cuts relative to the supply increases from U.S. shale", said an analyst at Australia's Rivkin Securities, William O'Loughlin.

This implies that crude oil price, which stood at $48.27 per barrel, last week, would increase to $51 per barrel or more, signalling a good omen for Nigeria, which depends on crude oil for its fiscal responsibilities.

  • Zachary Reyes