Crude Oil Slides Despite Inventories Decline

Randal Sanchez
June 4, 2018

NEW YORK, June 2 ― Oil prices retreated yesterday after the dollar rose on better-than-expected U.S. employment data, which pressured greenback-denominated commodities, including crude.

At Multi Commodity Exchange, crude oil for delivery in June traded Rs 10 or 0.22 per cent lower, at Rs 4,507 per barrel in 2,252 lots. Last week, the market lost around 3 percent, adding to a near 5-percent decline from a week before.

By the end of April 2018, both OECD and USA inventory levels were lower than the averages for April 2013-April 2017.

The drawdown assuaged some worries from USA traders who have watched the West Texas Intermediate crude (WTI) benchmark weaken due to high production levels and signals that OPEC will let its supply-cut pact come to a close.

The United States accounted for more than half of that decline, as USA crude oil and other liquids inventories decreased by 162 million barrels over that period.

"We are going into summer, the high demand season, and I think we are going to see a fall in USA crude oil inventories, but shale oil output is growing".

Over the first four months of 2018, oil production in Kazakhstan totalled 30 million tonnes, 6 percent higher as compared to the same period a year ago.

Futures in NY fell 1.8 percent, set for the first monthly drop since February.

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Oil fell, compounding a monthly decline, after US crude inventories were said to rise by more than expected.

OPEC output rose by just 12,000 barrels per day (bpd) to 31.93 million bpd in April, according to figures OPEC collects from secondary sources.

WTI light sweet oil was down 57 cents at USD66.66 a barrel, extending this week's losses.

The price increase was mainly due to the production cut by the Organisation of the Petroleum Exporting Countries, OPEC, and its partners.

Sources told last week that Saudi Arabia, the effective leader of OPEC, and Russian Federation were discussing boosting output by about 1 million bpd to compensate for losses in supply from Venezuela and to address concerns about the impact of us sanctions on Iranian output.

The Houston-based oilfield services company Baker Hughes reported on Friday that there were now 861 rigs drilling for oil in the United States with more than half of them - 477 - situated in the western Texas Permian Basin. Output has risen for 14 straight weeks as drillers put more rigs to work.

Rosneft PJSC is testing its capacity to bring back production it cut under the deal between Moscow and OPEC by boosting output this week by about 70,000 barrels a day, Renaissance Capital said.

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