Published: Wed, March 14, 2018
Economy | By Melissa Porter

Crude Oil Sinks Toward USD60 Ahead Of Inventories

Crude Oil Sinks Toward USD60 Ahead Of Inventories

A pump jack is seen at sunrise near Bakersfield, California October 14, 2014. The futures on USA crude oil with delivery in April fell by 0.20% to 61.24 Dollars per barrel.

Brent crude futures slipped 54 cents, or 0.8 per cent, to settle at US$64.95 per barrel.

SINGAPORE, March 13 (Reuters) - Oil prices dipped on Tuesday, extending losses from the previous session, as the inexorable rise in US crude output weighed on markets. That compared with analysts' expectations for an increase of 2 million barrels.

Oil fell more than 1 percent on concerns over rising U.S. production and as equities fell, erasing earlier gains driven in part by the firing of U.S. Secretary of State Rex Tillerson. By January 9, it hit $68 before falling to $61.64 by February 1. At the same time, crude oil throughput rose 7.3 percent to 93.4 million tonnes, implying a need for more imports.

Despite this, oil markets remain relatively weak.

The quick movement of the markets was underestimated by Goldman Sachs, who in turn increased its forecast for Brent oil, showing that prices could reach $82.50 per barrel by the summer of this year.

Unlike Middle Eastern nations such as Saudi Arabia, which wants high crude prices to boost the value of its IPO of state-run Aramco, Iran expressed its concern over steadily-rising USA production by stating it wants to work with the Organization of the Petroleum Exporting Countries (OPEC) to keep prices at $60 and curtail the output.

Bijan Zanganeh, oil minister for Iran, said over the weekend that OPEC could agree in June to begin easing current oil production curbs in 2019; however, he added that working with the cartel to thwart the Americans is vital because "If the price jumps [to] around $70 .it will motivate more production in shale oil in the United States".

US crude inventories are expected to show an increase later in the day when the American Petroleum Institute reports its weekly findings. The U.S. government expects major shale regions to boost output by 131,000 bopd in April, spurring fears that surging supplies will undermine OPEC's efforts to clear a glut.

Estimates by the EIA show global supplies will exceed 100 million bpd for the first time in the second quarter of 2018, while demand will only break through that level in the third quarter, implying a slightly oversupplied market.

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