Sun, Apr 30, 2017 - Page 14 News List

Oil down for month on US output


Oil on Friday rose in New York, trimming a monthly decline, as OPEC and Russia cited their adherence to output-cut targets in the face of surging US production.

Futures on Friday gained 0.7 percent, while losing 2.5 percent for the month.

Russia said it is on the verge of fully implementing its pledged 300,000 barrel-per-day supply cut.

OPEC output this month probably fell by 20,000 barrels per day to 31.72 million, according to JBC Energy GmbH.

Crude’s rally in the first half of the month lost steam on concerns that growing US output threatens to lessen the impact of OPEC’s efforts.

“It feels like the market is getting a little more positive, even though it’s not showing up in prices,” Matt Sallee, who helps manage US$17.1 billion in oil-related assets at Tortoise Capital Advisors LLC in Leawood, Kansas, said by telephone. “Russia at least claims they are getting pretty close to where they need to be, so that is very helpful. It seems like there is a greater consensus around the production cuts getting extended.”

US crude production has expanded to the highest level since August 2015, and Saudi Arabian Minister of Energy Khalid al-Falih has said that the first quarter of curbs failed to bring stockpiles below the five-year average.

While OPEC and its allies mull extending their deal past June, US drillers continue to ramp up operations, bringing the rig count to the highest since April 2015.

West Texas Intermediate (WTI) for June delivery on Friday increased US$0.36 to settle at US$49.33 per barrel on the New York Mercantile Exchange. Total volume traded was about 1 percent above the 100-day average. The contract is down slightly from last week’s US$49.62 per barrel.

Brent for June settlement, which expired on Friday, climbed US$0.29 to close at US$51.73 per barrel on the London-based ICE Futures Europe exchange. The contract was little changed from last week’s US$51.96 per barrel.

The more active July contract rose US$0.23 to end the session at US$52.05 per barrel.

The global benchmark crude traded at a premium of US$2.40 to WTI.

OPEC’s supply cuts have had some success as US crude inventories have fallen for the past three weeks.

Global stockpiles increased by less than average during the first quarter and producers’ compliance with the agreed curbs was at 98 percent last month, OPEC Secretary-General Mohammad Barkindo said on Thursday.

The US oil rig count rose for a 15th week, increasing by nine to 697, according to data published on Friday by Baker Hughes Inc.

The number of working rigs has more than doubled from May last year’s low of 316.

OPEC compliance has been good, but the question is whether it will stay that way, Bill O’Grady, chief market strategist at Confluence Investment Management in St Louis, Missouri, said by telephone. “The fact that the Russians aren’t cheating is a good thing and frankly kind of remarkable. On the other hand, you still have a pretty serious inventory overhang.”

As prices hover near US$50 per barrel, major oil companies are making a comeback.

Exxon Mobil Corp doubled its quarterly profit, surpassing almost every analyst’s expectations.

The US$0.95 per share profit for the first quarter was larger than all but one of the 19 analysts’ estimates in a Bloomberg survey.

Chevron Corp swung to a profit of US$2.68 billion in the quarter, compared with a loss of US$725 million a year earlier.

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