Gold Silver Reports (GSR) – WTI Slip on Threat of OPEC Boost – Crude Oil Prices finished with a modest loss on Thursday, a day after a big rally, as rising output from the U.S. remained a threat to efforts by other major producers to re-balance the market.
“U.S. West Texas Intermediate (WTI) crude CLc1 futures fell $1.15 to settle at $66.73 a barrel, a 1.7 percent loss. Brent crude LCOc1 futures settled up 9 cents to $75.39 a barrel”.
Saudi Arabia and Russia have discussed raising OPEC and non-OPEC oil production by 1 million barrels per day (bpd) to counter potential supply shortfalls from Venezuela and Iran.
Ahead of the Organization of the Petroleum Exporting Countries’ meeting on June 22, concerns that Saudi Arabia and Russia could increase output have exerted downward pressure on oil prices.
“Market participants remain unsure how quickly an exit strategy can be implemented and whether it will go beyond just balancing the output drop from Venezuela,” said Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics in London.
Still, prices continued to find some support following data Wednesday showing the drop in U.S. crude supply in 10 weeks, as well as weaker dollar in the wake of the Federal Reserve’s less-hawkish-than-expected rate announcement.
Oil prices also briefly traded higher in the last hour before the settlement, buoyed comments from Khalid al-Falih, Saudi Arabia’s energy minister, who said output cuts led by the Organization of the Petroleum Exporting Countries may be extended if necessary, according to Bloomberg News. The market also saw volatility tied to the day’s expiration of April crude oil options.
“As options expire, the market tends to gravitate towards an even number” and WTI prices made a late-session attempt to climb toward $49, said Phil Flynn, senior market analyst at Price Futures Group. The market was also “looking at Russia and OPEC comments to get a sense of whether [its members and other major producers] will extend production cuts.”
Russian news agency TASS reported Thursday that Lukoil’s president considers it is reasonable to extend the six-month production cut agreement Russia and other producers made with OPEC.
West Texas Intermediate crude oil for April delivery US:CLJ7 edged down by 11 cents, or 0.2%, to settle at $48.75 a barrel after rallying by 2.4% on Wednesday. May Brent crude UK:LCOK7 shed 7 cents, or 0.1%, to $51.74 a barrel on the ICE Futures exchange in London.
Oil prices climbed Wednesday after data from the Energy Information Administration showed an unexpected drop in U.S. stockpiles last week. They got an added boost just before that session ended as the U.S. dollar weakened in the wake of the Federal Reserve’s decision to lift its benchmark interest rate by 25 basis points, as expected.
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But U.S. crude inventory levels remain near record highs. This comes at a time when U.S. producers are taking advantage of rising prices to crank up production. EIA data show in the latest week, U.S. output hit a 13-month high at 9.1 million barrels a day.
Elsewhere in the energy spectrum, April gasoline US:RBJ7 rose 0.2% to $1.589 per gallon, while April heating oil US:HOJ7 fell 0.3% to $1.508 a gallon.
Natural-gas prices, meanwhile, has pared some of its declines after U.S. government data showed a fall of 53 billion cubic feet in supplies of the fuel for the week ended March 10. Analysts polled by S&P Global Platts forecast a decline of 55 billion cubic feet. – Neal Bhai Reports (NBR)
