Oil prices up despite rising OPEC supplies
Oil prices fell in trading on Thursday after reports detailed increased production from some OPEC members and despite signs of a tightening market in the United States.
Brent crude settled down by 35 cents to $52.01/barrel and US light crude ended the day down by 56 cents to $49.03. US crude had traded at a session high of $49.96 a barrel.
According to a Reuters survey, OPEC crude exports reached a record high last month, mostly driven by significantly higher exports from Nigeria and Libya. OPEC reached a 2917 high of 33 million b/d in July, up 90,000 b/d from June.
“Our view of the oil market is that a major rally is unlikely in 2017,” National Australia Bank analysts said in a note. “Absent further production cuts or a sustained uptick in demand, prices are likely to remain in the low to mid $50s for the remainder of the year.”
With US light crude hovering under the $50 mark and capped by high domestic supplies, Gene McGillian, director of market research at Tradition Energy told Reuters “The market needs continuing signs of improvement in the inventory picture to really drive the prices higher.”
Wednesday’s report by the US Energy Information Administration showed a record gasoline demand of 9.84 million barrels per day (b/d) for last week. The EIA reported commercial crude inventories were down by 1.5 million barrels to 481.9 million barrels.
According to Reuters, that was below levels seen at this time last year, indicating a tightening US market.
Many oil companies have taken steps to adapt to this era of low prices and have found through cost cutting and new technologies, they can produce and operate at much lower costs.
Goldman Sachs said earlier in the week that the oil industry has adapted to oil prices around $50/barrel. Shell and BP chief executives both said they were expecting lower-for-longer oil prices.
