nsucurrent.com March 17, 2018

Oil hit by broader market downdraught, USA output rise also weighs

09 March 2018, 03:29 | Ruby West

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Brent Crude

Vessel-tracking and port data suggest Asian imports of USA crude were equivalent to about 560,000 barrels per day (bpd) in February, down sharply from 676,190 bpd in January.

For 2019, the EIA forecast a crude production increase of 570,000 bpd to 11.27 million bpd.

Exports of US crude oil to Asia appear to be starting to struggle under the weight of a narrowing discount for its domestic benchmark crude to worldwide grades and efforts by other suppliers to maintain competitiveness.

USA crude oil output is set to top 11 million barrels per day this year, making it the world's largest producer and threatening to offset the boost to prices from reduced supply from rivals within OPEC.

Oil prices settled higher Monday (http://www.marketwatch.com/story/oil-prices-climb-amid-supply-issues-in-libya-2018-03-05), getting a lift from reports of a sizable weekly decline in crude stocks at the USA oil storage hub in Cushing, Okla. Traders also mulled a report from International Energy Agency, which forecast further growth in US crude production, but also emphasized the need for more investment in the market to avoid a supply shortage after 2020.

West Texas Intermediate crude for April delivery dropped $1.42 to $61.18 a barrel at 1:43 p.m. on the New York Mercantile Exchange. Cohn, a free trade advocate and former president at Goldman Sachs, had opposed Trump's plans for the proposed tariffs on aluminum and steel.

Brent crude futures were at $64.49 per barrel at 0100 GMT, up 15 cents, or 0.2 per cent, from their previous close.

Should this forecast come to pass, OPEC would be hard pressed to continue pumping less oil than before and even that won't guarantee oil prices remaining at comfortable levels for the cartel's members. Traders said this news may be an indication that the Trump Administration is not as serious as suspected about implementing the tariffs.

Crude inventories rose by 5.661 million barrels in the week to 426.880 million barrels, data from the American Petroleum Institute showed on Tuesday. Crude stocks at Cushing fell by 0.6 million barrels, while stocks of gasoline (0.79m) and distillates (0.56m) also decreased. The resurgence in USA production is the most prominent change since the group's last forecast. Both benchmarks were trading down from last Tuesday afternoon.

That will most likely require rising shale oil output, a levelling out of US refinery demand and ongoing OPEC curbs to keep prices other than WTI at elevated levels.

"The smaller-than-expected inventory build led to swift short covering".

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