Oil prices slide almost 1 percent on persistent glut concerns

Robyn Valdez
June 6, 2017

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

Oil prices moved higher following the EIA inventories data on Thursday, but there was selling pressure above $49.00 p/b and prices retreated again late in the USA session.

West Texas Intermediate, the US benchmark for the price of oil, still in the July contract, was up 0.20 percent to $48.41 per barrel.

Counting Nigeria and Libya, total Opec oil output remained about 450,000 barrels a day above the target set out in the Nov 30 production agreement, putting the group only about 66 per cent of the way toward its goal, compared with 90 per cent last month, according to data compiled by Bloomberg. "If for some reason we need to do more, we will consider doing more including. bigger cuts".

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Global benchmark Brent crude futures were down 23 United States cents, or 0.45%, at US$50.4 a barrel by 0316 GMT.

Libya and Nigeria are the two OPEC nations exempted from the production cut deal.

Global benchmark Brent crude futures was down 1.7 percent, or 80 cents, at $49.75 a barrel, as of 0725 GMT. It estimated that large operators such as Anadarko Petroleum Corp. and Marathon Oil Corp. are expected to increase output by 400,000 barrels a day, with smaller independent producers projected to add a further 100,000 barrels.

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. The African producer now cranks out around 830,000 barrels a day, a huge jump compared with the sub-300,000 barrels a day seen in last July.

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With a production capacity of about 600,000 barrels per day (bpd), Qatar's crude output is one of OPEC's smallest but tension within the Organization of the Petroleum Exporting Countries could weaken the supply deal, aimed at supporting prices.

However, U.S. crude production rose to 9.34 million bpd last week, up almost 500,000 bpd from a year ago.

Growing worry over crude oversupply after Libya increased output has sent worldwide oil prices lower, which is likely to result in a price cut of NT$0.5 (US$0.017) per liter for gasoline and diesel at CPC Corp. Pressuring the market through $47.44 will put the market in a bearish position.

"This is a little bit of a bounce back from last Thursday when we had a really heavy drop", an energy economist at the Arkansas-based WTRG Economics James Williams, said before adding that at current production levels OPEC will not be able to balance supply in nine months.

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Russia's Rosneft CEO Igor Sechin also said the market can not stabilize unless all producers cut output.

Other reports by Info About Network

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