By November 16, 2017 Read More →

Oil prices dip for fifth straight day on rising US production, inventories

Oil prices

Oil prices dipped on Thursday after the US Energy Information Administration reported a build in crude and gasoline inventories. Nabors photo.

Oil prices could drop more if OPEC deal not extended

Oil prices dipped Thursday on rising US production and crude stocks, dampening the recent rally spurred by tightening global supply due to OPEC’s supply cut pact.

As of 1:36 p.m. EST, benchmark Brent was down 32 cents to $61.55 and US WTI fell by 4 cents to $55.29/barrel.  The Canadian Crude Index had dipped to $40.06.

Should Brent end the day lower, it will be the fifth straight day of declines.

The International Energy Agency reported on Thursday that the US is expected to account for over 80 per cent of the growth in the world’s crude supply in the coming decade.

On Wednesday, data from the US Energy Information Administration showed US crude production had hit a record high of 9.65 million barrels per day (b/d) last week. This marks an increase of almost 15 per cent since mid-2016.

The EIA also reported that US crude inventories rose for a second straight week, increasing by 1.9 million barrels to 459 million barrels in the week ending Nov. 10.  The agency also noted that US gasoline inventories also increased.

In a note, RBC commodity strategist Michael Tran said most of the rest of the world’s inventories are consistent with historic averages.

Reuters reports Tran wrote “It is no coincidence that the recent price rally has occurred concurrently with several weeks of record setting surges in exports.”

Further drops in oil prices have been offset by expectations that OPEC will agree to extend their supply cut agreement to the end of 2018.  Currently, the deal reducing the global crude supply by 1.8 million b/d is set to expire in March 2018.

Recently, a number of oil ministers from participating oil producing countries pact voiced support for extending the deal.

“It is widely believed that OPEC and non-OPEC nations will roll over their production until (end) 2018,” PVM Oil Associates analyst Tamas Varga told Reuters.

“If they don‘t, or if the period will be shorter than nine months, I think we will see even lower prices. Brent would break back below $60 a barrel.”


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