Published: Fri, April 27, 2018
Global Media | By Abel Hampton

Oil Prices Dip On Crude, Gasoline Build

Oil Prices Dip On Crude, Gasoline Build

New York-traded West Texas Intermediate crude futures tacked on 9 cents to $68.14 a barrel by 08:00 GMT. Despite putting a proposal forward for an enhanced Iran nuclear deal, French President Macron said he expected President Trump to pull out of the deal.

Oil prices were mixed on Thursday as the market weighed up the risk of renewed USA sanctions on Iran and plunging Venezuelan output against a backdrop of strong demand, above all in Asia, the world's biggest oil-consuming region.

First-time claims for USA unemployment benefits fell to their lowest level in almost five decades in the week ended April 21st, according to a report released by the Labor Department on Thursday.

Focus within the oil market remains on whether President Trump will decide to reimpose sanctions on Iran in coming weeks.

Meanwhile, it was gathered that the light sweet Nigerian crude is very similar to the light oil produced in the United States shale.

Despite this, Otunga said "the sustainability of the rally is a concern" as it was fuelled largely by political risk in the Middle East.

The market is already tight because of production outages in Venezuela and production cuts implemented by OPEC and Russian Federation, analysts at Commerzbank said in a note.

U.S. crude production rose by 46,000 barrels per day (bpd) on the previous week, to 10.59 bpd.

With most USA producers now profitable at prices under $40 per barrel and the forward curve significantly higher than that for years to come, American drillers will likely continue to increase output as they are able to hedge themselves profitably for the foreseeable future.

USA crude oil inventories rose by 2.2 million barrels in the week to April 20, to 429.74 million barrels.

"The builds in crude oil and gasoline inventories are obviously negative, but soaring crude oil and gasoline exports cut against those data points", said John Kilduff, partner at energy hedge fund Again Capital LLC in NY.

With US output and exports surging, some analysts warn that the 20% climb in Brent prices since February is starting to look overdone.

"Market sentiment is turning increasingly bullish towards the commodity", said Lukman Otunuga, research analyst at futures brokerage FXTM.

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