Oil edges lower Friday as supply concerns return
Petroleumworld 08 03 2018
Oil prices were down on Friday as the market re-focused on bearish longer term factors following a bounce in the previous session as U.S. crude inventories in a key hub fell to their lowest in nearly four years.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $68.70 per barrel at 0847 GMT, down 26 cents from their last settlement.
Brent crude futures LCOc1 were at $73.15 per barrel, down 30 cents from their last close.
Stocks at the key Cushing storage hub USOICC=ECI in Oklahoma fell by 1.3 million barrels, the lowest level since October 2014, according to data from the Energy Information Administration (EIA). This helped to pushed Brent futures to close $1 a barrel higher on Thursday. [EIA/S]
Overall U.S. crude oil inventories actually rose by 3.8 million barrels last week to 408.74 million barrels C-STK-T-EIA, the EIA data showed.
“Trade volume is pretty low in futures today. Yesterday you had a strong rebound supported by Cushing but there's not a lot else that is driving prices higher so we are seeing a bit of a correction,” Olivier Jakob at Petromatrix consultancy said.
However, low stocks were still providing a floor as even with last week's rise, overall U.S. crude inventories are below the 5-year average of around 420 million barrels.
WTI is heading for a roughly flat week after four weekly falls, while Brent is on track to post a fourth week of declines in five, set for a drop of 1.4 percent.
Analysts said the outlook beyond the short-term was turning bearish.
“Bulls are fighting a losing battle ... Brent oil may fall to $67 per barrel,” said Reuters technical commodities analyst Wang Tao.
Russian oil output rose by 150,000 barrels per day (bpd) in July from a month earlier, to 11.21 million bpd, energy ministry data showed on Thursday.
Output by top exporter Saudi Arabia has also risen recently, to around 11 million bpd, and U.S. production C-OUT-T-EIA is around that level as well.
Saudi Arabia, Russia, Kuwait and the United Arab Emirates have increased production to help to compensate for an anticipated shortfall in Iranian crude supplies once planned U.S. sanctions take effect later this year.
But a complete halt to Iranian supplies looks unlikely with Bloomberg reporting on Friday that China, Iran's biggest customer, has rejected a U.S. request to cut imports from the OPEC member.
China's Unipec has also suspended purchases of U.S. crude amid the growing trade row, sources said.
“Unipec saying they won't buy U.S. crude and China saying they won't comply with Iran sanctions are bearish,” Jakob from Petromatrix said.
Story by Julia Payne; Reporting by Aaron Sheldrick in TOKYO and Henning Gloystein in SINGAPORE; Editing by Richard Pullin, Tom Hogue and Jane Merriman
reuters.com 08 03 2018 08:55 GMT
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