Oil rises on strong China data, but rising United States output caps gains

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The U.S. supply increase is expected to come as the Organization for Petroleum Exporting Countries, dominated by oil giant Saudi Arabia, works with Russian Federation to slash output after prices for crude plummeted to around $30 per barrel in 2016 from over $100 two years earlier.

The U.S. Energy Information Administration said Wednesday that crude supplies rose by 5 million barrels for the week ended March 9.

Oil prices edged up on Wednesday after posting two days of declines at the start of the week.

There is a split between Saudi Arabia and Iran on the ideal oil price.

Rising output, as well as seasonally low demand, mean that USA crude inventories rose by 1.2 million barrels in the week to March 9, to 428 million barrels, the American Petroleum Institute said on Tuesday.

"The total USA crude, gasoline and distillate stocks have increased in eight of the past 10 weeks, raising 24 million bl in total since the start of the year".

"The risk is now much higher that President Trump will not waive the sanctions when it is time to do so in May, thus derailing the deal", said Bjarne Schieldrop, chief commodities analyst at SEB AB.

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Brent crude oil futures were last up 2 cents at $64.66 a barrel by 2:10pm GMT, while US West Texas Intermediate futures were up 11 cents at $60.82 a barrel.

Gasoline stockpiles, however, dropped 6.3 million barrels for the week, while distillate stockpiles lost 4.4 million barrels, according to the EIA.

Brent for May settlement fell 23 cents to $64.41/bbl on the London-based ICE Futures Europe exchange, and traded at a $3.90 premium to WTI for the same month. A broader market slump initially drove prices lower, while surging American production and increasing inventories remain a challenge.

Estimates by the EIA show global supplies will exceed 100 million bpd for the first time in the second quarter of 2018, while demand will only break through that level in the third quarter, implying a slightly oversupplied market. He will likely push for the USA to exit the nuclear deal with the Persian Gulf nation in May, and could advocate for tougher sanctions on Venezuela, which might boost oil prices, she said.

China reported a 7.2% year-on-year increase in industrial output in the first two months of the year, roundly beating expectations.

Restraint shown by U.S. producers supports Goldman Sachs Group's bullish oil view, the bank said in a report.

USA production growth is still expected at 2.7 percent in 2018, up from 2.3 percent in 2017.