Oil prices fall on relentless rise in United States crude output

Ann Santiago
March 14, 2018

Oil prices settled with a loss on Monday (http://www.marketwatch.com/story/oil-prices-pull-back-from-strong-finish-last-week-as-market-renews-us-supply-watch-2018-03-12), giving back part of the sharp gains seen in the previous session as recent data showed a rise in weekly USA output, as well as expectations for a further increase in domestic production next month.

In oil markets, USA energy companies last week cut oil rigs for the first time in nearly two months, with drillers cutting back four rigs, to 796, Baker Hughes (GE.N) energy services firm said.

West Texas Intermediate for April delivery traded at $62.06 a barrel on the New York Mercantile Exchange, up 2 cents at 1:35 p.m.in Tokyo.

Between November 2017 and February 2018, Indian crude oil imports from Venezuela averaged some 300,000 bpd, down by around 20 percent compared to the same period a year earlier, industry and shipping sources told Reuters on the condition of anonymity.

On the other hand, the Iranian oil minister Bijan Zanganeh mentioned that the Organization of the Petroleum Exporting Countries or OPEC is going could come to a conclusion on their June meeting to ease the current production curbs by the year 2019.

Brent for May settlement added 12 cents to $65.61 a barrel on the London-based ICE Futures Europe exchange.


But the analyst seems to think this might be a fait accompli, because the OPEC deal is giving "market share to the U.S." via a surge in exports to the coveted Asian market, the traditional bastion of Middle East producers - and that this will encourage some nations to retaliate by boosting supply.

ING's Patterson agrees that keeping a lid on price hikes is necessary; in an interview in Singapore he said, "We need to see prices in the short-term trade below $60 to reduce that incentive for USA producers".

The Energy Information Administration (EIA) said the United States may drastically reduce its import of crude oil from Nigeria by 2022, going by its projection of becoming a net energy exporter in four years. The most bullish scenario will be a weaker U.S. Dollar and higher equity prices.

"The ever-expanding USA supply continues to pose significant downside risk to oil prices", said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore. Asia is the biggest buyer of the supplies.

Support came from a report that USA crude inventories are not rising as much as expected during the spring season that is starting, implying healthy demand.

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