Oil falls as investors cut bullish bets on worries over United States output

Andrew Cummings
April 2, 2017

Oil prices ticked higher during European morning hours on Thursday, after touching their lowest level since the end of November as the market weighed record-high stockpiles in the US against efforts by major producers to cut output to reduce a global glut.

At the MULTI COMMODITY EXCHANGE, crude palm oil for delivery in April fell by Rs 1.80, or 0.34 per cent, to Rs 519 per 10 kg, in a business turnover of 134 lots.

Benchmark Brent crude futures were down 60 cents at $51.16 a barrel at 0934 GMT. The deal with non-OPEC states was reached in December.

USA production rose to 9.1 million bpd for the week ended March 10 from an average 8.9 million bpd for 2016 as shale producers added rigs. The contract fell as low as $49.71 in morning trade.


Benchmark Brent crude oil was trading at $50.31 a barrel by 1430 GMT, down 33 cents on the day and hovering above Wednesday's slide to $49.71, its lowest level since November 30 when OPEC announced plans to cut output. OPEC, which sources say is leaning toward extending cuts, has broadly delivered on pledged reductions, but non-OPEC states have yet to cut fully in line with commitments.

However, other market commentators expect oil markets will tighten soon, arguing that the Opec-led cuts will only start to take effect from April.

Investors were waiting for data from the American Petroleum Institute (API) at 4:30 p.m. EDT on Tuesday and the U.S. Energy Information Administration (EIA) at 10:30 a.m. EDT on Wednesday.

"The risks that OPEC has painted itself into a corner can not be ignored and it may need to extend or even increase cuts, if the response from shale producers is more vigorous than we now model", they said in a report.


"Crude oil prices fell as concerns over rising US inventories resurfaced".

US crude oil inventories rose by 4.5 million barrels in the week to March 17 to 533.6 million, the American Petroleum Institute (API) said late on Tuesday.

USA shale oil producers have been adding rigs, pushing up the country's weekly oil production to about 9.1 million bpd for the week ended March 10, up from an average of 8.9 million bpd for calendar 2016, according to US energy data.

Greg McKenna, chief market strategist at brokerage AxiTrader, said the fall in crude oil prices could be attributed to "the cracks in the Opec/non-Opec deal" with USA shale oil back as the new swing player in production.


Last week Tuesday, oil fell to the lows of the year, below $48, after the Organization of Petroleum Exporting Countries' monthly report showed that Saudi Arabia's output was above 10 million barrels in February.

Other reports by iNewsToday

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