Login ID:
Password:
Partner Login
Contact Us : 7066511911

Crude Prices Fall Further on Rise in U.S. Output, Inventories

2 Mar 2017 11:52 am
By Sarah McFarlane and Jenny W. Hsu 

Oil prices extended losses on Thursday, with bearish sentiment fueled by the latest increase in U.S. crude stockpiles and production in addition to the strength of the dollar on currency markets.

Brent crude, the global oil benchmark, fell 0.8% to $55.92 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.8% at $53.39 a barrel.

U.S. crude inventories rose to a new high last week, increasing by 1.5 million barrels to 520.2 million barrels, according to data by the U.S. Energy Information Administration. The increase derived largely from significant imports from Saudi Arabia, Iraq, and Canada, though strong domestic production, which rose above 9 million barrels for the second straight week, also contributed.

Exports of gasoline hit a record high, while domestic demand was around 6% lower than a year earlier. Data for gasoline demand could be revised to show stronger demand as has happened in the past, said Olivier Jakob, managing director of consultancy Petromatrix.

Burgeoning U.S. crude output in recent months has largely offset the output cuts by some of the world's biggest oil producers--mostly members of the Organization of the Petroleum Exporting Countries along with some nations outside the cartel including Russia--agreed to in a deal late last year.

The net impact has been to keep prices in a tight range, with doubts lingering on whether countries are complying fully with the OPEC-led deal to reduce production by 1.8 million barrels a day, analysts say.

Estimates so far of how well OPEC has complied with the production agreement have reassured, but "Russian data released this morning for February shows that output remained largely stable month on month, suggesting that compliance on the non-OPEC side is not likely to see significant gains," said JBC Energy in a note.

Market observers expect the next major price mover to be OPEC's meeting at the end of May at which members will deliberate whether to extend the cuts beyond the initial six-month period.

"The OPEC decision could be the first disappointment even though at the moment members are showing a 90% compliance rate to the production cut deal," said Vivek Dhar, a commodities strategist with Commonwealth Bank of Australia.

Oil prices were also pressured by the U.S. dollar rising on increasing odds that the Federal Reserve could raise interest rates as early as later this month. Since oil business is conducted in dollars, a stronger greenback is typically a deterrent for buyers using other currencies.

The WSJ Dollar Index, a measure of the U.S. dollar against a basket of major currencies, was last up 0.27% at 91.76.

Nymex reformulated gasoline blendstock--the benchmark gasoline contract--fell 1.6% to $1.65 a gallon. ICE gasoil changed hands at $488.00 a metric ton, down $8.75 from the previous settlement.

Write to Sarah McFarlane at sarah.mcfarlane@wsj.com and Jenny W. Hsu at jenny.hsu@wsj.com
 

(END) Dow Jones Newswires

March 02, 2017 06:52 ET (11:52 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.
Disclaimer
Top 5 Special Reports
Weekly: ICE Raw Sugar Closes the Week over 9-Month on ...
Weekly: ICE Cotton Marks 2nd Weekly Gain on China Tarif...
Weekly: Urad, White/Green Pea Post Strong Gains As Cust...
U.S. Soy Exports Hit 2 Year High, As China’s Interest D...
Tamil Nadu Sugar Mill Prices – 06 December 2019