Wednesday, 22 November, 2017

Oil prices mixed in choppy trade, rising USA production weighs

Nellie Chapman | 21 April, 2017, 03:29

Oil prices wavered between small losses and gains Thursday, buffeted by continued concerns about growing US crude production that were offset by signals that other major producers remain in favor of extending their output-cut agreement into the second half of the year. Andrew Lipow, president of Lipow Oil Associates in Houston, said some in the market were concerned about the rapid recovery in shale production."Perhaps the amount coming out of the ground might be more than we anticipate", he said.

As Saudi Arabia is overcomplying with the OPEC production cuts and showing fellow OPEC members a "lead by example", the Kingdom cut its crude oil exports in February to the lowest level since May 2015, while Saudi refineries processed record amounts of supply for domestic use.

At a press conference in the United Arab Emirates, Saudi Energy Minister Khalid al-Falih said that "there is consensus building but it's not done yet".

On the New York Mercantile Exchange, May West Texas Intermediate crude rose 6 cents, or 0.1%, to $50.50 a barrel after tapping a low of $50.21.

June Brent crude on London's ICE Futures exchange rose 8 cents, or 0.2%, to $52.99 a barrel.

Prices for natural gas, meanwhile, fell as the EIA reported a larger-than-expected weekly climb in USA supplies of the commodity. The US government's Energy Information Administration Wednesday reported a drawdown in commercial crude inventories for the week ended April 14, which should have been a bullish influence, but was overshadowed by a bearish build of 1.57 million barrels in gasoline stocks, against analyst expectations of a 2-million-barrel decline.

OPEC members Saudi Arabia and Kuwait signaled that the Organization of the Petroleum Exporting Countries and other producers, including Russian Federation, would likely extend their oil output cut beyond June.

But U.S. stockpiles and production have cast doubt on whether the OPEC cuts were enough.

Thirteen members of the Organisation of the Petroleum Exporting Countries (OPEC) and 11 non-OPEC members agreed to cut production by about 1.8 million barrels a day to prop up oil prices in December past year.

"With questions hanging over US gasoline demand, any further product builds will act as a brake on the oil price recovery", he said. Gasoline stocks posted a counter-seasonal build of 1.5 million barrels, despite heavier refining activity.