US Oil Export Surge Means OPEC's Output Cuts May Be Doomed

US Oil Export Surge Means OPEC's Output Cuts May Be Doomed

Andrew Cummings
March 13, 2018

The EIA is due to publish its latest weekly USA production data on Wednesday.

Both crude benchmarks dropped by around one per cent the previous session.

U.S. West Texas Intermediate (WTI) crude futures were at $61.25 a barrel at 0414 GMT, down 11 cents, or 0.2 percent, from their previous close.

Oil prices were down on Monday as investors grappled with ongoing concerns over rising USA output and tight OPEC supply, while the benchmark US yield hovered near multi-year highs ahead of an auction later in the day. West Texas Intermediate, the USA marker, is now near $62 a barrel.

Energy investors are weighing increased USA supply against the likelihood that the Organization of the Petroleum Exporting Countries will maintain supply cuts that have been in effect more than a year.

"We are maintaining a bearish trading stance in anticipation of a range in nearby WTI between about $58 and $63, Jim Ritterbusch, president of Ritterbusch and Associates, said in a note".

US oil production gains nevertheless are offsetting an effort led by the Organization of Petroleum Exporting Countries to cut into the surplus on five-year oil inventories through output curtailments.

Crude oil prices slipped into negative territory early Monday, following big gains last week, as broader global trade concerns spill into commodities. That is not far off the 2.957 percent yield on February 21, the highest since the instrument yielded more than 3 percent in January 2014.

The increase in rig count in the US also points to more output to come in the future.

The Treasury on Monday sold $28 billion of three-year notes and $21 billion of the 10-year notes, in what analyst George Goncalves called an "on-the-screws type auction". Influencing the market are geopolitical factors, potential world crisis', supply and demand, and weather changes, just to name a few factors.

Emerging market stocks rose 1.21 percent.

The Dow Jones Industrial Average .DJI fell 104.75 points, or 0.41 percent, to 25,230.99 and the Nasdaq Composite .IXIC added 36.21 points, or 0.48 percent, to 7,597.02.

The broader trend remained positive for Wall Street's main indexes, which had closed up almost 2 percent on Friday on the strength of the jobs report.

The Japanese yen strengthened 0.41 percent versus the greenback to 106.35 per dollar, while sterling was last trading at $1.3908, up 0.42 percent on the day.

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