Sun, Apr 16, 2017 - Page 14 News List

Crude caps third weekly gain as market nears balance


Oil capped its third weekly gain after the International Energy Agency (IEA) said production cuts have brought world markets “very close to balance” and should soon deplete stockpiles that rose in the first quarter.

Futures gained 1.7 percent for the week as the agency on Thursday said that despite OPEC’s near-perfect implementation of the curbs it agreed to with Russia and other allies, stockpiles edged higher because of supply increases the countries made before the deal took effect on Jan. 1.

Total US petroleum stockpiles declined last week while crude output climbed to the highest in more than a year, according to US government data released on Wednesday.

Oil had rallied above US$53 per barrel after some OPEC members voiced support for prolonging production cuts with other nations beyond June.

While US crude stockpiles declined from a record last week, OPEC on Wednesday said in a report that rivals in the US shale industry are growing stronger.

“We’re at a bit of a crossroads here,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by telephone. “The IEA said that global inventories are on the cusp of declining. At the same time, they may have underestimated the growth of US production.”

West Texas Intermediate (WTI) for May delivery on Thursday rose US$0.07 to settle at US$53.18 per barrel on the New York Mercantile Exchange.

The contract gained 1.8 percent from last week’s US$52.24 per barrel. Total volume traded was about 3.3 percent below the 100-day average.

Brent for June settlement on Thursday climbed US$0.03 to US$55.89 per barrel on the London-based ICE Futures Europe exchange.

The contract is up 1.2 percent from last week’s US$55.24 per barrel. The global benchmark crude closed at a US$2.29 premium to June WTI.

Trading in New York and London were closed for the Good Friday holiday.

Oil inventories in the 35-nation Organization for Economic Cooperation and Development increased by 38.5 million barrels in the first quarter of this year to about 3 billion barrels, offsetting the decline in emerging economies, the IEA said.

The agency trimmed forecasts for global demand this year by about 100,000 barrels per day to 1.3 million per day.

Saudi Arabia, OPEC’s biggest producer, is said to favor extending the supply curbs when the group meets next month, in line with the views of fellow members such as Kuwait and Venezuela.

While such a decision would reduce oil inventories and support prices, it would “offer further encouragement to the US shale sector and other producers,” the IEA said.

US crude output last week rose by 36,000 barrels per day to 9.24 million barrels per day, the US Energy Information Administration said on Wednesday.

That is the highest since January last year.

Rigs targeting oil in the US this week rose to 683, the highest level since April 2015, according to Baker Hughes Inc data released on Thursday.

Oil market news:

‧ China’s crude imports last month surged to a record, making it the world’s biggest importer. Arrivals rose to 9.21 million barrels per day, Bloomberg calculations based on customs data showed.

‧ OPEC members Iraq and the United Arab Emirates are putting pressure on a decision to extend curbs by pumping more than they agreed under the pact, while others, such as Saudi Arabia, produce within their quotas.

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