Oil caught in broader market downdraught as concern grows over USA trade

Robyn Valdez
March 9, 2018

The IEA has calculated that the Americans will pump 17 million barrels per day (bpd) of crude oil, condensates and natural gas liquids, easily defending its title as the world's top producer of petroleum products, and up from 13.2 million bpd in 2017.

At just below 11 million bpd, only Russian Federation now produces more crude oil than the United States, although the International Energy Agency (IEA) expects even this to change as the United States is set to surge past 11 million bpd by late 2018.

IEA says the pipeline constraints have increased the forward discount for Canadian production, adding $3.75 a barrel in 2018, and $2/Bbl in 2019 to the forward differential curve between Western Canada Select and WTI since its last report a year ago, the Canadian Press reported.

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Oil futures were lower Thursday morning as rising United States production and a stronger dollar pulled NYMEX crude toward $60/b.

Oil fell on Thursday, following a sharp rise in the dollar, steering prices towards a second consecutive weekly fall against a backdrop of rising US crude production and inventories. April WTI crude rose $1.32, or 2.2%, to settle at $62.57 a barrel on the New York Mercantile Exchange.

Brent crude futures fell 47 cents to $63.87 per barrel by 1500 GMT.

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“The overhang from the Cohn resignation. could see oil prices move lower during today's session, ” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage OANDA in Singapore.

Cohn's resignation came after he lost a fight over Trump's plans for hefty steel and aluminum import tariffs.

The prospect of the Organization of the Petroleum Exporting Countries and non-member producers, including Russian Federation, maintaining crude output cuts in the face of a boom in USA shale production helped lift Brent back above $65 a barrel this week.

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Although the International Energy Agency on Monday reported that surging output form the US will dominate the global oil industry for the next five years, several experts think the market is also changing to the point where shareholders are now seeking shale companies that have enough self discipline to not pump to the point where another glut occurs. Traders said this news may be an indication that the Trump Administration is not as serious as suspected about implementing the tariffs. Crude stocks at Cushing fell by 0.6 million barrels, while stocks of gasoline (0.79m) and distillates (0.56m) also decreased. The U.S. already passed top exporter Saudi Arabia late past year. That compares with a 2.5-million-barrel build in the previous week.

Other reports by Info About Network

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