June 24, 2017

Oil mixed; global crude glut drags despite big USA inventory draw

06 June 2017, 06:38 | Ignacio Smith

The government data boosted oil prices, acting as a salve for the market's ongoing concerns about a global glut.

Oil prices extended losses on Friday to hit a three-week low, after rising USA production and President Trump's withdrawal from the Paris Climate Accord overrode the fall in crude inventories there.

Nasdaq в статье Oil prices at 3-week low as rising output risks OPEC-led deal that Benchmark Brent oil was down $1.63, or 3.1 percent, at $50.21 a barrel by 1341 GMT, after earlier touching $50.12 a barrel, the weakest since May 10.

On Wednesday, a Reuters survey found output from the Organization of the Petroleum Exporting Countries (Opec) rose in May, the first monthly increase this year, as higher supply from two states exempt from a production-cutting deal, Nigeria and Libya, offset improved compliance with the accord by others. It was the 20th straight weekly increase in the number of active US oil rigs.

Brent crude tumbled below $50 on Friday, heading for a second straight week of losses, on worries that U.S. President Donald Trump's decision to abandon a climate pact could spark more crude drilling in the United States, worsening a global glut.

Futures advanced as much as 1.2 percent in NY after losing 3 percent the previous two sessions.

November's deal between the Organization of the Petroleum Exporting Countries and non-OPEC members like Russian Federation has been slow to take hold, as many nations sold inventory out of storage before truly cutting exports.

U.S. West Texas Intermediate futures were at $47.40 a barrel, down 26 cents.

In 2017, KLR expects USA oil demand to increase roughly 0.25% year over year to 19.7 million barrels per day.

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President Donald Trump has vowed to provide extra support for USA oil production and is widely expected to pull the United States out of a landmark global climate accord.

However, US crude production rose to 9.34mn bpd last week, up almost 500,000 bpd from a year ago.

Reuters sources say OPEC officials discussed deepening the cuts last week and could revisit the proposal.

Traders said that prices had received support from a tightening physical crude market.

"We have to see the market and I think by the end of June, in July we will see that the action we have taken has a big impact", TASS quoted him as saying.

So far, the production-cut agreement has had little impact on global inventory levels due to rising supply from producers not participating in the accord, such as Libya and Nigeria, and a relentless increase in US shale oil output.

But Jonathan Barratt, chief investment officer at Sydney's Ayers Alliance, said the US decision to walk away from the climate agreement was not likely to impact oil markets.

On Friday, Igor Sechin, chief of Russia's largest oil producer, Rosneft, said US oil producers could add up to 1.5 million bpd to world oil output next year.

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