Oil prices slightly down at end of day
Oil prices rose by pennies in Tuesday trading as investors weighed Kuwait’s pledge to join Saudi Arabia and Russia in supporting an expanded OPEC supply cut into the first quarter of 2018 against pending US crude stocks data.
Reuters reports Jim Risserbusch, president of energy advisory firm Ritterbusch & Associates said in a note “We expect a rangebound trade today with prices largely confining to yesterday’s parameters as the market awaits another round of weekly stats.”
According to a poll by Reuters, US crude inventories were expected to fall by about 2.3 million barrels last week. Should the data show a drop in stocks, that would be the sixth straight week where crude inventories fell after reaching a record high at the end of March.
Late Tuesday afternoon, the American Petroleum Institute will release data for the week and at 10:30 a.m. Wednesday, the US Energy Information Administration will release its crude stocks report.
Brent futures were down 60 cents to $51.22/barrel by 4:43 p.m. EDT and US crude fell by 58 cents to $48.26/barrel.
Also on Tuesday, Kuwait’s oil minister Essam al-Marzouq announced his agreement with Saudi Arabia and Russia’s plan to extend the OPEC plan to cut production by 1.8 million b/d until the end of March, 2018.
On May 25, OPEC will meet in Vienna. It is expected other member nations will pledge to continue output reductions.
Goldman Sachs said an extension of the pact would extend the rebound in oil prices “although the rally so far…has remained modest compared to the move that occurred last year when the OPEC cuts were first announced.”
James Woods, an investment analyst at Rivkin Securities told Reuters that despite the OPEC cuts, the global crude glut will likely hang on, adding “rising U.S. production and record inventories have kept upside limited and a nine-month extension at this stage is unlikely to break that.”
Goldman Sachs said OPEC members Libya and Nigeria, who have been excluded from the agreement, are expected to see a boost in output and US oil production is up by over 10 per cent since the middle of last year.
“These combined volumes could largely offset the benefit of the extended cuts,” Goldman Sachs said. The US bank is keeping its average Brent price forecast for 2017 Q3 at $57 per barrel.
