Oil prices pull back after another jump in U.S. supply
Oil futures were lower in Asian trade Thursday after weekly data showed another large increase in U.S. inventories of crude.
On the New York Mercantile Exchange, light, sweet crude futures CLZ6, -0.22% traded 8 cents lower at $45.49 a barrel, in the Globex electronic session. Brent crude on London’s ICE Futures exchange LCOJ7, -0.16% fell 10 cents to $46.52 a barrel.
U.S. stocks of crude oil jumped more than expected to 5.27 million barrels, although the impact was cushioned by a fall in output and increased capacity utilization by refineries.
Crude oil stocks have increased for three straight reporting periods, notes an S&P Global Platts report, adding that prior to this inventories had fallen for seven out of eight weeks.
An ANZ report said reports of the Organization of the Petroleum Exporting Countries member countries’ meeting with Russia in Doha this week to discuss production cuts has also helped improve investor sentiment.
Oil prices have been under pressure due to the prospect of rising global crude oil supplies despite pledges of cutbacks.
OPEC, the 14-nation cartel that controls over a third of the world’s oil, is trying to formalize a deal to cut production to between 32.5 million and 33 million barrels a day from record levels of 33.83 million barrels a day in October.
Saudi Energy Minister Khalid al-Falih is set to meet his counterparts, Russia’s Alexander Novak and Qatar’s Mohammed Saleh Al Sada, on the sidelines of the Gas Exporting Countries Forum, taking place in Doha on Thursday, according to people familiar with the plans.
Since a September meeting, some producer nations in OPEC have asked to be exempt from any output cut deal.
Iraq has said it needs to pump at will to finance its continuing war against the Islamic State.
Market watchers say without Russia’s commitment to cut or freeze production, OPEC members would be less inclined to scale back their own. Media reports on Wednesday quoted Russian Energy Minister Alexander Novak as saying that Russia would “support any decision” adopted by OPEC.
The victory of Republican Donald Trump in the U.S. presidential elections could also pose a further threat to Brent crude oil prices because his policies are seen as supportive of a recovery in U.S. shale oil production, a BMI Research report said.
“Further relaxation of drilling and environmental regulations, coupled by faster approval of midstream infrastructure will lend support to the recovery in output under Trump,” the report said.
“It is probable that his economic policies will take on a more protectionist bent, which is a net negative for global goods flows and export-dependent emerging markets. This would pressure oil demand to the downside, over a multi-year timeframe,” adds BMI.
It forecast an annual average price of $55.0/barrel and $53.0/barrel for Brent and Nymex, respectively, for 2017.
Nymex reformulated gasoline blendstock for December RBZ6, -0.28% — the benchmark gasoline contract —fell 37 points to $1.3154 a gallon.
ICE gasoil for December changed hands at $419.50 a metric ton, down $2 from the previous settlement.
Source: MarketWatch
