Oil Lingers Near $45 as US Supply Draw Meets Tepid Reaction
(Bloomberg) -- America’s biggest crude stockpile draw since September wasn’t enough to get oil markets excited as booming output from shale plays to Libya remain a concern.
Futures rose 1 percent in New York, paring gains of more than 3 percent before a U.S. Energy Information Administration report. Crude inventories fell 7.56 million barrels last week, the EIA said. U.S. production, though, continued to rise, gaining 0.6 percent to 9.397 million barrels a day. At the same time, the Organization of Petroleum Exporting Countries is said to have set a meeting for July 17.
"You kind of just can’t overcome the bearishness," said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis. "It’s still a bear market until proven otherwise."
Oil remains in a bear market amid concern expanding global supply will continue to offset curbs by the Organization of Petroleum Exporting Countries and its partners. Rebalancing is taking longer than expected because of a "change in fundamentals," OPEC Secretary-General Mohammad Barkindo said on Wednesday.
Increasing output from Libya and Nigeria has added to investor concerns about the global glut. Libyan production was said to rise to 1.05 million barrels a day, and is at the highest level since June 2013. Barkindo on Wednesday said OPEC is "glad" Libya, Nigeria and Iran are recovering production so quickly.
West Texas Intermediate for August delivery rose 45 cents to settle at $45.49 a barrel on the New York Mercantile Exchange. Prices increased 64 cents to $45.04 on Tuesday.
Brent for September settlement closed 22 cents higher at $47.74 a barrel on the London-based ICE Futures Europe exchange. Prices rose 64 cents to $47.52 on Tuesday. The global benchmark traded at a premium of $2.08 to September WTI.
The stockpile draw reported by the EIA exceeded the median estimate of 2.45 million barrels in a Bloomberg survey of analysts. Supplies remain more than 100 million barrels above the five-year average.
U.S. crude output will average 9.9 million barrels a day next year, the EIA said in its monthly Short-Term Energy Outlook Tuesday. While that’s down from a June estimate of 10.01 million, it’s still a record. OPEC’s first assessment of world markets in 2018 suggested that its current output, at 32.6 million barrels a day, will be too high as rival supplies expand and demand growth remains steady. Saudi Arabia told OPEC it pumped more than 10 million barrels a day in June, exceeding the production cap agreed last year for the first time. Mexico’s decision to allow private companies to explore for oil and gas started to pay off after the discovery of at least a billion barrels in a new offshore field.
With assistance from Ben Sharples and Grant Smith. To contact the reporter on this story: Meenal Vamburkar in New York at firstname.lastname@example.org. To contact the editors responsible for this story: Reg Gale at email@example.com Carlos Caminada.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.