Markets

Oil prices dip as supply remains ample despite output cuts

Oil prices dip as supply remains ample despite output cuts

Brent crude was up $1.18 at $53.29 at 12:10 p.m.(1610 GMT), while US benchmark crude oil was up $1.13 at $50.48.

USA crude oil CLc1 was up 14 cents at $49.49 a barrel, after finishing the previous session at $49.35 a barrel, the highest close since April 26.

USA crude oil inventories fell for a sixth straight week, as OPEC efforts to reduce supply appear to be coming to fruition ahead of the cartel's upcoming meeting next week, while gasoline and distillate stocks also dropped.

OPEC didn't give USA shale enough respect In the International Energy Agency's (IEA) latest monthly report, estimated inventories in industrialized nations totaled about 3.025 billion barrels on March 31. OPEC agreed to slash the output by 1.2 million barrels per day from January 1.

Opec members Kuwait, Iraq and Venezuela have supported an extension to the supply cuts.

That defied expectations of analysts who estimated a draw in the stockpiles of 2.4 million barrels, according to a Reuters survey.

Though investors aren't liable to make big bets ahead of the meeting, oil could get a kick later Friday when Baker Hughes' weekly US rig-count data are released.

As for oil products, Nymex June gasoline futures were recently up 0.4% at $1.6125 a gallon, diesel rose 0.7% to $1.5560 and ICE gasoil gained 0.5% to $467.50 per metric ton. In the most recent week, US production slipped 9,000 bpd to 9.305 million bpd, the first decline in 13 weeks.




USA crude imports rose 577 Mbbl/d last week, while exports rose 400 Mbbl/d.

USA crude inventories rose by 882,000 barrels in the week ending May 12 to 523 million barrels, according to the American Petroleum Institute (API), defying expectations of a drop.

Most members support a proposal by Saudi Arabia and Russian Federation to extend supply cuts for nine months, Algerian energy minister Noureddine Boutarfa said Thursday.

"The big shift - and what I think OPEC is trying to generate - is a shift in the curve to backwardation, where spot prices sit above forward prices", Currie told CNBC's "Power Lunch" on Wednesday.

"Adopting the same scenario approach for the second half of 2017, the stock draws are likely to be even greater", the agency said.

The significant increase in United States production and supplies to northern Asia has largely offset OPEC-led deal to rebalance the market.

In April, OPEC crude production saw its largest year-on-year decline in nearly three years as cartel members cut output by 535,000 bpd compared to the same period a year ago. Iran was not subject to the stringent production cuts of other large Opec producers when the first agreement was signed on 30 November 2016.


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