Crude oil futures lower in anticipation of USA stock build

  • Crude oil futures lower in anticipation of USA stock build

Crude oil futures lower in anticipation of USA stock build

A Reuters survey on Wednesday showed OPEC maintained its supply cuts in February, dropping output to 32.28 million bpd, lowest since April of a year ago. "Compliance with supply cuts reached a new high of 137 per cent", the report stated.

Oil prices could be setting up to disappoint.

Arab News quoted Mazrouei as saying that cooperation between oil producers including Russian Federation had reached levels that were "more than expected".

Demand in Europe may also be getting some help.

OPEC and its allies, including Russian Federation, have been withholding crude output by 1.8 million barrels a day since the start of 2017.

Oil analysts expect the price of crude to rise steadily this year but remain in a tight band dictated by US shale output growth on one side and OPEC supply restraint on the other, a poll showed on Wednesday.

Oil prices extended gains to hit their highest level in almost three weeks on Monday, supported by comments from Saudi Arabia that it would continue to curb exports in line with the OPEC-led effort to cut global supplies.

IEA Executive Director Fatih Birol said at an event in Tokyo the United States would overtake Russian Federation as the biggest crude oil producer "definitely next year", if not this year.

The stronger dollar makes commodities denominated in the US currency more expensive for holders of other currencies. Thus given that the oil price is now at $64 is near resistant then the oil price should soon reverse lower to target $58 which is likely to be the trend for most of March 2018 before the next assault on the high as my longer term 2018 forecast for a $80 crude oil price remains in tact. "The United States will become the No.1 oil producer sometime very soon", he told Reuters separately.

Prices did draw some support from Saudi Arabian oil minister Khalid al-Falih, who on Saturday said the country's crude production in January-March would be well below output caps, with exports averaging less than 7 million barrels per day.

The US Energy Information Administration said early this month that US output would exceed 11 million bpd by late 2018.

Just a few years ago, hardly anyone expected that that the USA would be competing with the world's top oil producers for the number 1 spot. And shale production is booming and on course to crown America as the world's top oil producer as early as later this year. Russian oil companies, eager to press on with new projects, have pushed for a swift end to the curbs, while OPEC members like Iraq, Iran and Libya are keen to expand capacity after years of lost revenues amid sanctions and conflict.

Birol said production growth was not just strong in the United States.