Oil dips, trade thin as some cash in after 3-week rally

Increasing US output is proving a constant source of irritation to attempts by the Organization of the Petroleum Exporting Countries (Opec) and other major oil producers to curb output and sustain a rally in prices in a market that has been oversupplied since mid-2014. Futures gained 94 cents last week to close at $53.18 a barrel.

Crude oil slid lower on Monday on signs that the United States is continuing to add output, largely counteracting strong economic growth in China and OPEC efforts to cut production.

June Brent crude on London's ICE Futures exchange fell $0.49, or 0.9%, to $55.40 a barrel.

"The market has also reacted in a way that the OPEC-non-OPEC decision has been earnest and practically successful because the prices, after a 20-day slump, returned to the $55 domain indicating that the OPEC has lived up to its output cut plan", he added.

USA crude inventories probably shrank by 1.7 million barrels last week, according to a Bloomberg survey before an EIA report Wednesday. Stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest U.S. oil-storage hub, fell by 570,000 barrels last week, according to a Bloomberg survey.

GLOBAL oil markets remained on edge - the entire last week - as interesting, and at times conflicting, developments continued to haunt it.

OPEC is due to meet on May 25 to weigh an extension of output cuts beyond June to alleviate a glut that has depressed prices for almost three years.

China has a healthy appetite for oil (to say the least), and over the past four years its reliance on OPEC suppliers for crude imports has ballooned from 34 to 43 percent.

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US West Texas Intermediate (WTI) crude futures were also down 4c at $52,61 a barrel. While global supplies are rising because of refinery maintenance, the market is rebalancing, he said.

Oil prices fell on Tuesday, then slid more in post-settlement trade after an industry group reported that US crude stockpiles fell less than expected in the latest week while gasoline stockpiles grew unseasonably.

This brought China's net oil product exports in March to 1.97 million mt, up 51.5% year on year and higher by 5.3% from February.

Oil producers are showing "very good" compliance with pledged production cuts, Saudi Arabia's Energy Minister Khalid Al-Falih said yesterday in Riyadh.

The U.S. oil rig count climbed to 683 last week, the highest since April 2015 and a 13th week of gains, Baker Hughes data showed on Friday.

Oil declined below $53 a barrel as the US continued to ramp up drilling, stoking concern that the nation's surge in output this year will offset OPEC-led efforts to cut a global supply surplus.

Highlighting the fact that the demand for Iran's crude exceeds its supply, Zanganeh noted, "We have no worries on selling oil, nor do we intend to wage a price war".

  • Ronnie Bowen