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US supply growth offsets OPEC support makes Oil prices slip

The oil price touched USD 71 a barrel on Tuesday, near its high for the year, but has struggled to gain further traction since then, despite supportive comments from the Organization of the Petroleum Exporting Countries.


Reuters
Updated: 27-08-2018 13:15 IST
US supply growth offsets OPEC support makes Oil prices slip

"This is the third consecutive week of stock build at the WTI delivery hub, and as a result, we continue to see the Brent-WTI spread widen," ING said in a note. (Image Credit: x-true.info)

Oil lingered below this week's highs on Thursday, support from OPEC's commitment to controlling its output was partly offset by another rise in U.S. inventories.

The oil price touched USD 71 a barrel on Tuesday, near its high for the year, but has struggled to gain further traction since then, despite supportive comments from the Organization of the Petroleum Exporting Countries.

June Brent crude futures were down 39 cents at USD 68.37 a barrel by 1128 GMT, while the May contract, which expires later on Thursday, was down 9 cents at USD 69.44.

WTI crude futures fell 11 cents to USD 64.27 a barrel.

Oil has risen by 4 percent since January, on track for its third consecutive quarter of price increases and the longest stretch of quarterly gains since late 2010.

"Right now, oil looks fragile," Petromatrix strategist Olivier Jakob said. "The price action last week was pretty clear. The objective of that move was to take out the highs of 2018, but that's not been done and the price action of the last three days has not been very convincing,"

OPEC, Russia and some other non-OPEC producers started cutting output in January 2017, lifting the price of Brent - the benchmark for most of OPEC's exports - by about a quarter since.

Sources at OPEC said the group and its allies were likely to keep their deal on cutting output for the rest of 2018 when they meet in June.

But rising inventories and production in the United States has capped gains in crude prices. Commercial U.S. stocks rose by 1.6 million barrels in the last week to 429.95 million barrels, while output hit a record 10.43 million bpd, the Energy Information Administration (EIA) said.

Inventories tend to build over the first quarter of the year as refineries shut down for maintenance. U.S. crude stocks have risen by 5.5 million barrels, marking the smallest increase in the first three months of the year since 2003.

"This is the third consecutive week of stock build at the WTI delivery hub, and as a result, we continue to see the Brent-WTI spread widen," ING said in a note.

The premium of Brent over WTI has grown to nearly USD 5 a barrel, the highest since January, up from about USD 2.70 a month ago, making Brent-linked crudes less attractive to refiners than U.S. oil.

This week marked the launch of the Shanghai crude oil futures contract, which has lost about 10 percent since it first opened on Monday. It ended Thursday's session at 409.7 yuan (USD 65.18) a barrel.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

COUNTRY : United States