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Oil prices remain level on OPEC's assurance to rebalance crude market

20 April, 2017, 08:55 | Author: Paula Vaughn

Oil edged lower after a report showed US gasoline supplies increased for the first time in nine weeks even as crude stockpiles dropped.

"The glaring rise in USA gasoline refined product inventories, in combination with persistent lower-48 production growth, keeps us cautious on oil prices", said Chris Kettenmann, chief energy strategist at Macro Risk Advisors LLC in NY.

Oil slid more than 1 percent on Wednesday, after US data showed a counter-seasonal build in gasoline inventories and a smaller-than-expected decline in overall crude stocks coupled with another rise in domestic crude production.

Under the deal, OPEC is curbing its output by about 1.2 million barrels per day from January 1 for six months in an attempt to eradicate a supply glut.

May West Texas Intermediate crude CLK7, -3.95% lost 15 cents, or 0.3%, at $52.26 a barrel on the New York Mercantile Exchange.

U.S. crude stocks fell 1 million barrels in the latest week, according to the U.S. Energy Information Administration, a bit less than anticipated. Crude production rose to the highest since August 2015.

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But Barkindo said at a conference in Abu Dhabi that the cartel and other top nonmember producers are committed to keeping global crude inventories below the five-year average.

Oil had rallied above $53/bbl after some members of the Organization of Petroleum Exporting Countries voiced support for prolonging cuts past June, but rising USA output is undermining the effort to trim a global glut.

Saudi Arabia, Iraq and Kuwait believe $60 a barrel will lift their economies and allow for more energy-industry investment, the officials said, without jumpstarting too much American shale output, which can be ramped up and down with prices more easily than most oil production.

US crude imports rose last week by 56,000 barrels per day. Oil prices will increase as demand improves, chipping away at oil inventories in the second half, he said.

"It seems that the optimism in the oil market we have seen since the last few days of March is running out of steam", wrote Tamas Varga, PVM Oil Associates analyst, noting the "ever-increasing rise" in United States shale output.

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