Published: Sat, June 10, 2017
Finance | By Kristine Clayton

Oil rises as US stockpiles fall

Oil prices moved higher following the EIA inventories data on Thursday, but there was selling pressure above $49.00 p/b and prices retreated again late in the U.S. session.

He added that the move could complicate the market outlook in a way that "would not be favorable to oil prices".

OPEC and other producers, including Russian Federation, agreed last week to extend a deal to cut production by about 1.8 million barrels per day (bpd) from January to June until the end of March 2018.

"With the USA putting the environmental agenda on the back burner, its fossil fuel industry looks set to receive carte blanche on drilling rights which will further spur the revival in US oil supply", said Stephen Brennock from brokerage PVM.

The Organisation of Petroleum Exporting Countries, OPEC, on Thursday said it is too early to determine when production caps should be imposed on Nigeria and Libya.

Industry data on USA oil inventories from the American Petroleum Institute (API) late on Wednesday had given prices an initial lift on Thursday morning.

Global benchmark Brent crude futures were down $1.15, or 2.2 per cent, at $50.69 a barrel by 1039GMT, after earlier touching $50.63 a barrel, the weakest since May 12. Libya's output soared 210,000 barrels a day to 760,000 while Nigeria's gained 100,000 to 1.7 million after fields in both countries resumed output as internal strife eased.

Last week 22 OPEC and non-OPEC nations agreed to extend crude oil production cuts - previously announced in November 2016 - for an additional nine months, sidelining 1.8% of total global supply until the end of March 2018.

The data added to concerns over a global supply glut as USA shale oil drilling continues to climb.

The dollar maintained a generally firm tone against the yen which also tended to stifle support for oil, although the overall dollar performance was mixed during the session.

OPEC and non-OPEC are making slow progress despite reported high levels of compliance with output cuts implemented from the start of 2017 and recently extended to the end of March 2018.

Data released Thursday by the U.S. Energy Information Administration showed that commercial crude inventories fell by 6.4 million barrels in the week to May 26, compared with analyst expectations for a decrease of 2.5 million barrels.

"We want to institutionalize cooperation between OPEC and non-OPEC producers", Falih said.

"Growth in oil production from U.S. shale acreages will remain a real threat that could scupper much of the benefits from output cuts by OPEC and some non-OPEC members", he said.

"In terms of heavy crude, we have heavily relied on Middle East because it's been the most economical crude and we buy all types of crude oil from Russia, Africa, Europe and USA, if they become economical", Song said.

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