Oil prices drop as United States pumps more

Gladys Abbott
April 21, 2017

Crude stocks declined 1.034 million barrels to 532.343 million barrels in the week ended April 14, EIA data showed Wednesday. Oilgram Price Report also brings a vast array of Platts Global prices for crude and products, netback tables, and market critical data.

U.S. West Texas Intermediate crude futures traded down 46 cents at $52.19 a barrel.

That could indicate fading strains from an oversupplied market, though USA crude oil production continues its build beyond 9 million barrels per day, offsetting the decline in oil inventories to some extent.

Increasing US output is undermining attempts by the Organization of the Petroleum Exporting Countries and other major oil producers to curb output and sustain a price rally in a market that has been oversupplied since mid-2014.

It also said the Asia group, includeing India, was anticipated to lead oil demand growth this year followed by China and the Organisation for Economic Co-operation and Development (OECD) Americas.

At the same time, Citi experts warn that a failure to extend the output agreement may "precipitously" lower prices for crude, as increased supplied in late 2016 is still "a dark cloud hanging over the market".

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Global benchmark Brent crude futures fell 11 cents, trading at $55.25 a barrel, while Brent touched $54.76 intraday, its lowest since April 7.

Still, Saudi Arabia's energy minister has said it was too early to discuss an extension.

In politics, U.S. President Donald Trump ordered a review of whether the lifting of sanctions against Iran was in the United (Shenzhen: 000925.SZ - news) States' national security interests.

While that news is particularly shocking, gasoline inventories saw a rather unexpected build of 1.374 million barrels-analysts were expecting a 2.2-million-barrel draw for the fuel instead. "With questions hanging over US gasoline demand, any further product builds will act as a brake on the oil price recovery".

The Organization of Petroleum Exporting Countries said in a report a day earlier that inventories shrank in developed nations during the first quarter, while forecasting that rivals in the U.S. shale industry will boost output.

Official US oil data is expected to be published later on Wednesday by the Energy Information Administration (EIA).

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