Oil prices drop amid US withdrawal from climate deal

Nick Mcbride
June 3, 2017

Rystad predicts USA oil production to come roaring back, hitting 9.4 million barrels a day in May. "(It) is helping the oil market regain some ground this morning".

"But crude production is slowly but surely going to neutralize the (OPEC-led) production cut", said Sukrit Vijayakar, director of energy consultancy Trifecta.Rising output from Nigeria and Libya is also undercutting the oil producers' attempt to limit production.

The U.S. government also reported that domestic oil production increased to 9.34 million barrels a day from 9.32 million the week earlier, a sign that shale producers continue to ratchet up output even with oil floundering in the high $40s per barrel.

USA imports fell on average 309,000 barrels a day and we saw gasoline demand rise to a respectable 9.82 million barrels a day.

Gasoline stockpiles fell by 2.9 million barrels, while distillate stockpiles were up 400,000 barrels last week, according to the EIA. After settlement, both benchmarks fell, failing to sustain the lift from the morning news of declining USA crude and gasoline stocks.

USA light crude traded at $48.31, down $1.35, or 2.7 per cent.

The trading arm of oil giant Saudi Aramco is looking to step up hiring for its Singapore office as it pushes into the regional energy hub, three sources with knowledge of the matter said.

Domestic gasoline and diesel prices are expected to drop next week, after two consecutive weeks of increases, amid renewed concerns over a global supply glut in the worldwide oil market, market sources said Friday. Gasoline consumption averaged 9.822 million b/d, up 118,000 b/d from the week to May 19 and the highest for this time of the year since 2013.

Oil prices drop amid US withdrawal from climate deal

"The agreement between OPEC and non-OPEC countries, with the biggest contribution from Saudi Arabia and Russian Federation, has given the market a breather, but it's hard to consider these as systematic measures that would lead to long-term stabilization", Sechin said on Friday.

The EIA has monthly data on exports available through March only.

Nigeria is also bumping up its production rate and the daily average may hit 2.2 million barrels this month, according to the chief executive of a local oil company, Oando.

In 2017, KLR expects USA oil demand to increase roughly 0.25% year over year to 19.7 million barrels per day. Cool temps cause a higher than expected 81bcf increase into natural gas storage, but predictions of an active hurricane season and a return to warmer weather may start to support prices.

"We didn't see that high a volume". We track the Gulf Coast cargoes and some flows by pipeline as well. On a week-to-week basis it is extremely volatile. All of that USA crude caused a global glut. This year that number has ramped up to 40 percent. Refining runs came in at a record as refiners ran 17.5 million barrels of crude operating at 95% of capacity. Libya's daily output recently touched 800,000 barrels a day, up from 600,000 barrels late previous year.

Crude exports also hit a peak, rising almost 700,000 bbl/d to 1.3 million bpd, as imports fell 987,000 bbl/d, the EIA said.

The 11 members bound by the output caps were fully compliant with their pledges last month, just as they were in April, the survey showed. "That includes China, India and to a lesser extent South Korea".

Other reports by VgToday

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