Oil turns positive as market awaits EIA data

20 May, 2017, 03:49 | Author: Leticia Walters

USA crude oil was 16 cents lower at $48.91.

The downward correction partly reversed gains from the previous session when prices rose on the back of a drawdown in U.S. crude inventories and a slight dip in American production.

On the New York Mercantile Exchange crude futures for June delivery dipped 0.22% to $48.96 a barrel, while on London's Intercontinental Exchange, Brent was last quoted at $52.09 a barrel.

OPEC and its oil-producing partners may have to do more than merely extend their petroleum-output cuts to achieve their goal of rebalancing global supply and demand, the International Energy Agency said.

For the week ended May 12, the EIA said that crude oil inventories fell by 1.75 million barrels, compared to expectations of a draw of around 2.4 million barrels.

Brent reached US$52.63 a barrel and WTI rose as high as US$49.66 on Monday after Saudi Arabia and Russian Federation agreed on the need to extend output curbs by members of the Organization of the Petroleum Exporting Countries and other producers.

Organisation of the Petroleum Exporting Countries (OPEC), continued to reduce production in April, but output from Africa's top exporter - Nigeria, increased by 273,600 barrels per day (bpd).

Based on the current price action, it looks as if an OPEC agreement to extend the production cuts may be enough to hold prices in a range, but an agreement to make deeper output cuts may be needed to sustain the rally. Riyadh and Moscow say they should be extended until March 2018.

Oil producers have been trying to boost prices, as crude futures trade around $50 a barrel, less than half their level from early 2014, though above the low of below $30 in early 2015.

Overall oil supplies remain ample, with large amounts of crude from the United States and other producers being shipped to the big consumer regions in northern Asia, undermining OPEC-led efforts to tighten the market.

North Sea oil output, generally seen in terminal decline, is expected to jump by a net 400 Mbbl/d in the next two years with new projects and greater efficiencies.

A second source said he expected Iran would probably agree to a nine-month extension when Opec and non-Opec producers meet to set policy on 25 May in Vienna, provided that other producers such as Iraq were also on board.

Shipping data in Thomson Reuters Eikon shows that USA crude exports to Asia have soared from a handful of tankers a quarter throughout 2015 and 2016 to 10 tankers in the first quarter of 2017 and that figure is expected to rise.

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