Saturday, 23 February, 2019

Oil falls as U.S. maintains record output, inventories climb

Crude Oil US oil prices edge up as market eyes tighter supply
Nellie Chapman | 07 February, 2019, 14:51

US West Texas Intermediate (WTI) futures were at $55.13 per barrel, down 13 cents, or 0.24 percent, from their last settlement. Prices, which settled at a one-week low on Tuesday, were trading at $53.20 before the supply data.

Brent crude, the global benchmark, slipped 4 cents to $61.94 a barrel by 1331 GMT.

USA crude inventories rose by 2.5 million barrels last week, the American Petroleum Institute said on Tuesday. That was smaller than the 3.7 million-barrel rise expected by analysts polled by S&P Global Platts.

Crude stocks at the Cushing, Oklahoma, delivery hub rose by 1.4 million barrels, EIA said. But “the build is once again only modest, given stymied imports and strong exports.”.

"The key supply story remains the ongoing OPEC production cuts", United States bank Goldman Sachs said on Wednesday. Stocks gained by 1.3 million barrels in the week ended February 1, compared with analysts' expectations for an increase of 2.2 million barrels.

March natural gas NGH19, +0.56% settled flat at $2.662 per million British thermal units.

During the remainder of Q1 2019, the capital company expects a gradual lift in prices as OPEC data confirm compliance to the agreement and OECD oil stocks begin to fall to lower than the five-year average.

The sanctions will sharply limit oil transactions between Venezuela and other countries and are similar to those imposed on Iran previous year, experts said after examining details posted by the Treasury Department.

"Because the number was a little disappointing, it played into the slowing demand scenario", said Phil Flynn, oil analyst at Price Futures Group in Chicago.

“That being said, the downside could be limited as the OPEC and 10 partner producers outside the cartel are supposed to be actively managing output in an effort to rebalance the market, ” said Razaqzada.

Countering the rising USA crude output and inventories are voluntary supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) aimed at tightening the market and propping up prices. OPEC, excluding Iran, Libya and Venezuela, agreed to handle 800,000 barrels a day of those cuts. The United States is now the world's largest oil producer, ahead of traditional top suppliers Russian Federation and Saudi Arabia.

Citgo, the eighth-largest USA refiner and Venezuela's top foreign asset, is in the middle of a tug of war as the Trump administration has made aggressive moves to remove it from Maduro's control. A “partnership would control a greater market share and [offer] more control over the market.”.

"The weekly report from the EIA on US oil stocks was bullish for outright prices, plain and simple", said Tamas Varga, an analyst at PVM Oil Associates London.