Brent crude closes at 2017 low, erases gains since OPEC's cuts

Owen Stevens
May 3, 2017

US crude supplies are forecast to have decreased for a fourth week, while inventories of gasoline and distillate fuel are seen rising, according to a Bloomberg survey before a report from the Energy Information Administration on Wednesday. On Tuesday, the market slid 2.4 percent to its lowest close since March 21.

In the five minutes after prices fell below that key technical level, over 50,000 US contracts traded, representing about 10 percent of total trade at that time on Tuesday.

Putting everything together, in addition to data regarding rig counts, domestic USA production increases and the continued noise out of OPEC, it is fairly clear that there is going to be a glut of product on the market as we enter the so-called summer driving season this year, which should mean that the product tail will continue to wag the WTI dog well out into the foreseeable future.

The World Bank has retained its forecast for crude oil prices this year at $55 per barrel, but its projecting a price increase of $60 a barrel by 2018, owing to production cutback of petroleum exporting countries.

OPEC's compliance with the output cuts fell to 90 percent in April from a revised 92 percent in March, according to a Reuters survey.

The Organization of the Petroleum Exporting Countries and participating non-OPEC countries meet on May 25 to discuss whether to extend that reduction.

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OPEC output fell by 40,000 barrels a day to 31.895 million barrels in April, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data.

"We have an increasing demand in the second half of the year, and refineries will conclude maintenance work and start consuming oil and draw from inventories", Al Mazrouei said.

BP Plc BP.L Chief Financial Officer Brian Gilvary told Reuters that oil inventories would keep falling this year. Understanding that simple bit of human psychology may be a key determinant of the probable future path of crude oil (WTI) pricing.

Oil prices took some of their biggest losses of the year Tuesday, with concerns about rebounding output from Libya and oversupply in the USA pushing prices to new lows.

London Brent crude for July delivery LCOc1 was down 6 cents, or 0.1 per cent, at $51.46 by 0227 GMT, after settling down 53 cents on Monday. U.S. West Texas Intermediate crude was down 44 cents, or 0.9 percent, at $48.40 per barrel.

Most of the losses came in a steep drop late in the.

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