June 13, 2017
Oil’s gains over the past two days faded as OPEC reported rising production, offsetting expectations that U.S. crude stockpiles fell again.
Futures slipped 0.5 percent in New York after advancing 1 percent in the previous two sessions. OPEC said its output climbed the most in six months in May amid a recovery in Libya and Nigeria, members exempt from the group’s accord to lower production. U.S. crude inventories are forecast to have slid by 2.25 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report Wednesday.
Oil has traded below $50 a barrel amid speculation increased U.S. supplies will counter production curbs by the Organization of Petroleum Exporting Countries and allies including non-OPEC member Russia. American drillers targeting crude added rigs for the 21st straight week, the longest run of gains in at least three decades, according to data Friday from Baker Hughes Inc.
“The global economic backdrop is very solid, and we have high and solid demand levels,” said Norbert Ruecker, head of commodities research at Julius Baer Group Ltd. in Zurich. Still, “we don’t see these abundant oil inventories disappearing any time soon” and so “prices will keep shuttling around current levels, in the high $40s rather than the low $50s.”
West Texas Intermediate for July delivery was at $45.86 a barrel on the New York Mercantile Exchange, down 22 cents, at 1:08 p.m. in London. Total volume traded was 45 percent above the 100-day average. Prices gained 25 cents to $46.08 on Monday.
See also: Permian Productivity Has Been Declining Since September 2016
Brent for August settlement fell 17 cents to $48.12 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $2.03 to August WTI.
U.S. gasoline stockpiles probably decreased by 1.15 million barrels last week, according to the Bloomberg survey. Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the nation’s biggest oil-storage hub, declined by 1.4 million barrels last week, according to a forecast compiled by Bloomberg. Nationwide crude stockpiles expanded for the first time in nine weeks through June 2.
Shale output from major U.S. fields will expand to 5.48 million barrels a day in July, the EIA’s monthly Drilling Productivity Report shows. Libyan production climbed to 820,000 barrels a day after the restart of the Sharara field, according to a person with direct knowledge of the matter, who asked not to be identified because they are not authorized to speak to the media.