By March 14, 2017 Read More →

Oil prices slump on OPEC rising stocks, Saudi output jump

oil prices

Oil prices fell to a three-month low on Tuesday after Saudi Arabia reported an increase in production. Statoil photo by Ole Jørgen Bratland.

Oil prices at three-month low

Oil prices hit a three-month low in trading on Tuesday after OPEC reported a rise in global crude stocks as well as an increase in Saudi Arabia’s production.

Brent futures were down 91 cents to $50.44/barrel, after reaching $50.33, the lowest since Nov. 30.  US crude slid $1 to $47.40/barrel, recovering from its fall to $47.28 earlier in the day.

Saudi Arabia reported an increase in production to 10.011 million b/d, higher than the 9.797 million b/d secondary sources had reported.

Harry Tchilinguirian, global head of oil strategy at BNP Paribas, told Reuters Global Oil Forum “The focus on Saudi Arabia pushing production back to 10 million b/d after cutting beyond the call of duty in January is a key driver.”

“Saudi was the one compensating for the lack of compliance of others,” he said.

Oil prices have all but reversed all gains tallied since the OPEC supply cut deal was made at the end of November.

OPEC reported increases in US shale and other non-OPEC suppliers resulted in higher oil stocks in industrialized nations.  In January, inventories rose by 278 million barrels above the five-year average.

On Tuesday, the American Petroleum Institute will release weekly data, which is expected to show another rise in US inventories after last week’s report showed a bigger-than-expected increase.

 

“A sniff of another big crude build and down we go towards $45,” said Matt Stanley, commodities broker at Freight Investor Services told Reuters.

On Monday, Saudi ally Kuwait said it would support extending the OPEC supply cut deal.  The country’s Oil Minister said such an extension would “help bring prices to acceptable levels for oil-producing nations and the industry in general.”

Saudi Arabia has said it is to early to say if the deal will be extended.

 

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