Oil prices erased earlier gains: U.S. supply outweigh signs of demand gains

Oil Stock Markets

Oil prices on Tuesday erased earlier gains as investor concerns about rising U.S. oil output offset signs of stronger demand and faith in the ability of OPEC production curbs to curtail supply.  

U.S. West Texas Intermediate (WTI) crude for April delivery CLc1 was down 15 cents, or 0.2 percent, at $63.76 a barrel by 0532 GMT. The contract on Monday rose to its highest since Feb. 6 at $64.24. 

Brent crude LCOc1 in London was down 10 cents, or 0.2 percent, at $67.40 a barrel.

Soaring U.S. production is upending global oil markets, coming at a time when other major producers - including Russia and members of the Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) - have been withholding output to prop up prices LCOc1. 

The United States will overtake Russia as the world’s biggest oil producer by 2019 at the latest, the International Energy Agency (IEA) Executive Director Fatih Birol said on Tuesday. 

U.S. output was 10.27 million barrels per day (bpd), according to weekly government data released last Thursday, higher than the latest figures for Saudi Arabia, the world’s largest exporter, and just below Russia.

Earlier on Tuesday prices gained, extending multi-day rises for both crude futures. Last week, the U.S. Energy Information Administration (EIA) said there was a surprise draw on oil stockpiles amid a drop in imports and a surge in exports.

U.S. crude inventories are forecast to have risen by 2.7 million barrels last week.

Gasoline stocks are expected to fall by 600,000 barrels, while distillate inventories, which include heating oil and diesel fuel, may decline by 700,000 barrels. 

The American Petroleum Institute is scheduled to release its weekly data later on Tuesday, followed by the EIA on Wednesday.

Oil dips on higher US fuel stocks, but overall market remains supported

Oil Stock Markets

Oil prices fell on Wednesday, weighed down by data that showed an increase in U.S. crude oil and gasoline inventories.

Brent crude oil futures LCOc1 were at $69.83 a barrel at 0444 GMT, down 13 cents from their last close.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $64.43 a barrel, down 4 cents from their last settlement.

Traders said prices had been pressured by U.S. data showing an increase in crude and gasoline stocks.
The American Petroleum Institute said on Tuesday that crude inventories rose by 4.8 million barrels in the week to Jan. 19 to 416.2 million, after nine weeks of drawdowns.

Gasoline stocks climbed by 4.1 million barrels, while refinery crude runs fell by 420,000 barrels per day.

In Asia, oversupply of gasoline has pulled down refinery profits for the product to their lowest level since 2015.

Amid these weakening indicators, traders are taking measures to protect themselves from a potential fall in crude prices.

Trading data shows open interest for Brent put options LCO6700O8 to sell at $70, $69 and $68 per barrel has surged since the middle of last week on the Intercontinental Exchange (ICE).

Overall, there is now far more demand for options to sell Brent than there is for call options, which are the right to buy Brent at a certain price.

Despite this, traders said oil prices were unlikely to tumble far as markets remain supported by healthy economic growth, as well as from supply restrictions led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia.

In the latest sign of robust global economic growth, Japanese manufacturing activity expanded at the fastest pace in almost four years in January, a survey showed on Wednesday.

Economic growth is translating into healthy oil demand growth, which comes at a time that OPEC and Russia lead production cuts aimed at tightening the market and propping up prices. The deal to withhold output started in January last year and is currently set to last through 2018.

U.S. crude stockpiles drop as refineries restart: EIA

U.S. crude stocks fell last week as refineries hiked output because they restarted following Hurricane Harvey, while gasoline stocks increased and distillate inventories fell, the Energy Information Administration said on Wednesday.

Crude inventories USOILC=ECI fell by 1.8 million barrels in the week to Sept. 22, compared with analysts’ expectations for an increase of 3.4 million barrels. 

Crude stocks at the Cushing, Oklahoma, delivery hub USOICC=ECI rose by 1.2 million barrels, EIA said. 

Refinery crude runs USOICR=ECI rose by 1 million barrels per day, EIA data showed. Refinery utilization rates USOIRU=ECI rose by 5.4 percentage points. 

Gasoline stocks USOILG=ECI rose by 1.1 million barrels, compared with analysts’ expectations in a Reuters poll for a 921,000-barrel drop. 

Distillate stockpiles USOILD=ECI, which include diesel and heating oil, fell by 814,000 barrels, versus expectations for a 2.2 million-barrel drop, the EIA data showed. 

U.S. crude imports USOICI=ECI fell last week by 504,000 barrels per day.

Oil prices fall further with glut concerns persisting

Oil turned lower on Thursday after posting gains earlier in the session as traders look ready to test new lows for crude prices with worries persisting over a global glut.

Brent crude futures were down 15 cents at $44.67 a barrel at 0715 GMT, after spending much of the Asian trading day in positive territory. They fell 2.6 percent in the previous session to their lowest since November.

U.S. crude futures were down 14 cents $42.39 a barrel, after also spending much of the day trading higher. On Wednesday, they settled down at $42.53, after touching their lowest intraday level since August 2016.

Since peaking in late February, crude has dropped around 20 percent, with only brief rallies, completely erasing gains at the end of the year in the wake of the initial OPEC-led production cut.

The Organization of Petroleum Exporting Countries (OPEC) and other producers agreed to cut output by 1.8 million barrels per day from January for six months, subsequently extended for a further nine months.

The market largely shrugged off comments overnight from Iran's oil minister that members of OPEC are considering deeper cuts in production.

Crude inventories fell 2.5 million barrels in the week to June 16, surpassing analyst expectations for a decrease of 2.1 million barrels, as imports rose marginally by 56,000 barrels per day, the U.S. Energy Information Administration said on Wednesday.

Gasoline stocks fell 578,000 barrels, compared with analyst expectations for a seasonally unusual 443,000-barrel gain, which had been seen as bearish in the market.

Stocks of the motor fuel had also risen unexpectedly by 2.1 million barrels in the previous week, despite the start of the summer driving season.