Oil slips as U.S. crude inventories show signs of increasing

Sean Reid
June 4, 2018

Production in Texas rose by 4% to nearly 4.2 million bpd, a record high based on the data going back to 2005.

U.S. West Texas Intermediate crude CLc1 fell 48 cents to $66.56 a barrel by 12:03 p.m. EDT [1603 GMT].

There is some evidence to suggest that this has happened in recent weeks, with vessel-tracking data compiled by Thomson Reuters Oil Research and Forecasts pointing to record arrivals of USA crude in Asia in June.

"Though crude oil has receded significantly in the charts, market fundamentals remain supportive as robust global demand and declining stockpiles bolster prices upwards", Benjamin Lu, commodities analyst at Singapore-based broker Phillip Futures, said in a note.

After the report, US crude futures were down 57 cents to $67.62 a barrel as of 11:22 a.m. EDT (1522 GMT), while Brent crude August futures gained 61 cents to $78.33. Output at the world's largest listed oil producer Rosneft edged up by 0.2 percent in May from April.

US crude stockpiles fell 3.6 million barrels last week, the EIA said, exceeding expectations for a decline of 525,000 barrels.

Crude oil futures erased earlier losses on Friday but the USA benchmark price was set to lose ground for the second week, squeezed by record U.S. production and expectations of OPEC boosting output. In March it jumped 215,000 barrels per day (bpd) to 10.47 million bpd, a new monthly record, the Energy Information Administration (EIA) said yesterday.

Also holding the attention of traders this month has been the widening spread between Brent and WTI prices.

The premium doubled in about a month as a lack of pipeline capacity in the U.S. traps much of the output inland.

The premium has risen sharply in recent weeks, given that it was closer to $3 a barrel at the end of April.

Oil prices continue to exert pressure and fears of growth in oil production by OPEC +.

According to General Electric's Baker Hughes energy services firm, USA drillers added two oil rigs in the week to June 1, bringing the total to 861, the most since March 2015.

Venezuela, whose output has plunged due to an economic crisis, told OPEC its production fell to 1.505 million bpd in April, believed to be the lowest in decades.

Russian Energy Minister Alexander Novak said last week that a gradual increase in oil production under the OPEC + agreement could begin in the third quarter of this year, if such a decision is made.

There were 197 gas-seeking rigs and two miscellaneous rigs, creating a total rig count of 1,060, up 144 from this time a year ago, the highest count since March 2015.

Other reports by

Discuss This Article