US Stockpile Keeps Oil Prices Down

Owen Stevens
June 14, 2017

Oil prices have declined by more than 4% since the previous week which is one of the largest weekly declines since May after data on Friday revealed that USA oil drillers are expanding to 11 more active rigs which is the twentieth weekly rise in a row.

Brent crude prices LCOc1 were at $49.70 per barrel at 1351 GMT, down 42 cents.

However, last night's data from the American Petroleum Institute (API) said U.S. inventories fell by 4.6m barrels last week, beating analysts' expectations.

USA crude futures fell 4.6 percent, or $2.23 a barrel, to $45.96 a barrel, as of 11:18 a.m. EDT (1518 GMT).

"EIA also stated that USA production can touch a record ten million bpd next year from the current output of 9.3 million".

Nevertheless, prices drifted lower to the $47.60 p/b area ahead of the official inventories data with a slightly firmer dollar having some negative impact on prices.

A weekly report from the Energy Information Administration on Wednesday showed USA crude, gasoline and distillates stocks swelled in the week ended May 26. Libya and Nigeria's combined January-May average output of 2.312 million barrels per day is now 101,000 barrels per day higher than their October levels, the benchmark month against which the rest of OPEC members' cuts are determined, according to the S&P Global Platts survey.

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But analysts saw a risk that rivalries between OPEC members could weaken the production cut agreement.

If the EIA reports a draw, it would be the ninth straight decline for United States crude oil inventories, which could support oil prices. Nationwide crude inventories probably slid 3.25 million barrels for a ninth straight loss.

For the past week, crude imports averaged more than 8.3 million barrels a day, up by about 356,000 barrels a day compared with the previous week. Crude slid to its lowest level since May 9, with US benchmark futures down more than 10 percent in 10 days of trading.

Oil prices fell for a third day on Tuesday (June 6), hit by concerns that a political rift between Qatar and several Arab states would undermine an Opec-led push to tighten the market.

"This means shale producers see prices under $50 to be still economical", said a Singapore-based crude trader.

Investors fear that should geopolitical tensions in the Middle East escalate, Qatar may abandon its production quota previously agreed under the OPEC deal, which could derail the global pact to extend production curbs until March. API also reported gasoline supplies increased by 4.1 million barrels and distillate inventories increased by 1.8 million barrels.

Other reports by VgToday

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