Published: Mon, March 27, 2017
Economy | By Melissa Porter

Oil prices fall on bloated USA crude storage

U.S. light crude was down 35 cents at $47,89 a barrel, also heading back towards a three-month low.

Both benchmarks reached their lowest levels since November 30.

In Russia, private oil producers are ditching their scepticism and lining up behind an extension of output cuts after previous oil price increases compensated for lost income.

Oil prices slid to near four-month lows on Wednesday (22 March), with Brent briefly joining the West Texas Intermediate (WTI) below $50 per barrel levels before a marginal recovery, as data indicated that U.S. crude inventories rose well above market forecasts. "Cushing stocks are now 10 million barrels higher than October levels and quickly approaching record highs", he said.

Shrinking price differences between Global and domestic crude oil led to an increase in total US crude oil imports.

Oil ministers from OPEC and some non-OPEC states meet on Sunday in Kuwait, where they are expected to discuss compliance.

After posting modest gains overnight, the price for Brent crude oil was down about 0.3 percent in the minutes before the opening bell in NY to trade at $50.47 per barrel. However, by the end of the session, prices rebounded enough to erase most of the loss. The U.S. benchmark closed at a $2.60 discount to Brent.

USA crude oil inventories climbed 4.5 million barrels in the week to March 17 to 533.6 million barrels, the American Petroleum Institute (API) had said late on Tuesday.

Total U.S. crude oil production in 2016 fell below 2015 levels despite growth in the fourth quarter of the year and rising oil prices.

US inventories have seen major builds over the last few months, contributing substantially to a dampening of optimism for the immediate future of oil prices. Gasoline inventories fell to 243.5 million barrels, while supplies of distillate fuel, which includes diesel and heating oil, slipped to 155.4 million barrels.

US bank Jefferies said the Organization of the Petroleum Exporting Countries (OPEC), which as recently as the beginning of this year was viewed as the mechanism that would bring about sustained higher prices via its cutback initiative, noted that financial markets have "lost patience" with the cartel because the initiative has failed to trigger significant inventory drawdowns.

US shale oil producers have been adding rigs, pushing up the country's oil production to about 9.1 million bpd, from around 8.5 million bpd in late 2016.

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