Oil prices climb off 10-month lows as US stockpiles drop
- Author: Zachary Reyes Jun 22, 2017,
Jun 22, 2017, 20:46
European equity benchmarks were in the doldrums on the morning of the penultimate trading day of the week as falling oil prices pummeled commodity stocks and financials edged lower despite a raft of mainly positive economic data released by France.
USA crude futures (CLc1) settled at $42.53, down 98 cents or 2.3 percent, after touching a low of $42.13, the lowest intraday level since August 2016.
USA crude futures were 12 cents, or 0.3 percent, higher at $42.65 a barrel.
Brent crude, the worldwide marker, went as low as $44.51 just after 7pm (UK time), a drop of 3.26% since the previous day. On Wednesday, they touched US$42.05, their lowest intraday level since August 2016. "Meanwhile, oil output in the country is still rising despite recent declines in oil prices". Since peaking in late February, crude has dropped more than 20 percent, with only brief rallies.
Resurgent production, if sustained, will put further pressure on efforts by the Organization of the Petroleum Exporting Countries to trim output in support of oil prices.
Nigeria and Libya are exempt from the current supply cut because of production losses caused by unrest, and Iran was given a small increase so it could recover market share lost while under Western sanctions.
Nigeria's crude oil exports are set to exceed 2 million bpd in August, the highest level planned for 17 months.
"The question is whether OPEC will respond with further cuts or whether it needs to look again at its macro strategy for addressing low prices".
The fall in crude price came despite larger than expected U.S. crude and gasoline inventories, a sign that confidence in the OPEC deal is shaky.
Crude inventories fell 2.5 million barrels in the week to June 16, surpassing analyst expectations for a decrease of 2.1 million barrels, as imports rose marginally by 56,000 barrels per day, the U.S. Energy Information Administration said on Wednesday.
"Unless we see a marked reduction in crude stockpiles, the possibility of further short term falls in the price of oil can not be ruled out", he added.The American Petroleum Institute said on Tuesday U.S. crude stockpiles had dropped more than forecast.
Gasoline stocks fell by 578,000 barrels, compared with expectations for a seasonally unusual gain.
Overall, output is still increasing in the United States, where some shale producers can produce profitably even if oil prices drop below $40 a barrel.