Oil Prices Give Up Gains As Crude Supply, Production Rise

Pauline Gross
March 15, 2018

Twelve analysts polled ahead of inventory reports from industry group American Petroleum Institute (API) and the U.S. Energy Department's Energy Information Administration (EIA) estimated, on average, that crude stocks were seen rising 2 million barrels in the week ended March 9.

There is a split between Saudi Arabia and Iran on the ideal oil price.

USA oil production is set to rise further this year, OPEC said Wednesday, but the crude market will continue to rebalance as cartel members and Russian Federation trim their output in a bid to support prices.

Brent crude rose 29 cents to $64.93 a barrel at 1156 GMT, climbing from an earlier low of $64.43, while U.S. West Texas Intermediate (WTI) futures rose 46 cents to $61.17.

Analysts forecast that stockpiles of gasoline fell 1.2 million barrels last week.

"Crude oil prices were dragged up by product prices on the back of significant declines" in fuel inventories, said Andy Lipow, president of Lipow Oil Associates.

Earlier Wednesday, OPEC projected that US and other non-OPEC supply growth will outpace global demand growth in 2018, raising the risk of imbalance in the oil markets and lower crude prices.

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Moody's said oil prices have firmed since OPEC's November 2016 agreement to cut oil production by 1.2 million barrels per day (bpd), while non-OPEC members, led by Russian Federation, agreed to cut production by 558,000 bpd.

The International Energy Agency and the EIA have both recently revised their USA oil production forecasts higher.

The weekly oil release follows news of an uptick in USA shale deals.

Oil prices got a boost early in the session from a broader investor push into commodities after Chinese data showed industrial production in the world's largest importer of raw materials grew more than expected over the first two months of the year.

"The current healthy momentum in the global economy, together with the efforts undertaken by the OPEC and non-OPEC oil producing countries.is supporting the rebalancing of the oil market fundamentals", the report said. "This would see shale oil production soar by 1.5 million bpd within a year - enough to cover the total increase in global oil demand", Commerzbank said in a note.

Oil futures for April delivery have slipped below the May contract in recent days, which could be a bearish signal that discourages more investment.

Other reports by GizPress

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