News Worms
News Worms


Oil recoups losses, but U.S. oil output growth weighs

Oil recoups losses, but U.S. oil output growth weighs

Futures fell as much as 1 per cent in NY, paring last week's 1.8 per cent advance.

The price for June futures of Brent crude oil has decreased by 0.88 percent to $55.40 per barrel as of 06:09 (GMT +4).

But Spencer Cutter, U.S. Credit Bloomberg Intelligence Analyst, sounded a mild note of caution: "Big banks will be more selective when choosing who to extend loans and will increase lending to better producers".

US crude oil inventories remain near record-levels, but trended lower for the third-consecutive week; declining 2.2 million barrels from the week before.

Continuing disruptions in the Libyan production output are likely to support and push oil prices up further to trade between US$50 to US$56 (S$70 to S$78) a barrel for WTI Crude and US$55 to US$60 for Brent Crude. Even after taking into account production cut pledges from the eleven non-Opec countries, unplanned outages in Canada as well as in the North Sea, we expect production will grow again on a year-on-year basis by May.

"All the signs of an ever-growing bull market are starting to fade away, (with) Libya and geo-political tensions easing, but also because the Texans are back and they are pumping like there's no tomorrow", said Matt Stanley, a fuel broker at Freight Investor Services (FIS) in Dubai.

United States crude oil production has climbed to 9.24 million barrels per day, according to the latest Energy Information Administration data, making it the world's third-largest producer after Russian Federation and Saudi Arabia.

The U.S. rig count has been rising steadily throughout the year, as shale producers continue to ramp up capacity in response to stable prices.

China on Monday reported first quarter GDP rose 1.3% on the quarter compared to the same period a year ago for an annual pace of 6.9%, beating expectations for the year comparison. It is of course Opec's business to decide on its output levels, but a outcome of (hypothetically) extending their output cuts beyond the six-month mark would be bigger implied stock draws. Forecast-beating March investment, retail sales and exports all suggested China's economy, the world's second-largest oil consumer, may carry solid momentum into spring.

The US drill rig count climbed to 683 last week, the highest since April 2015 and a 13th week of gains, Baker Hughes data showed on Friday.

China's March refinery throughput also rose to 11.19 million bpd, just shy of December's record, as margins remained attractive.

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