Oil dips, trade thin as some cash in after 3-week rally

The International Energy Agency said in a report last month that demand growth for oil is expected to drop from 1.6m b/d a year ago to 1.4m b/d in 2017, so raising further problems for producers as they try to boost prices. Prices lost 53 cents to US$52.65 yesterday, the lowest close since April 7.

IN the London market, oil prices edged higher last Thursday after the International Energy Agency said the market was nearing balance, while data showing higher United States production kept gains in check.

More barrels could be on their way to market from USA shale fields as financial companies are investing billions in production, a Reuters analysis showed. The Opec and IEA monthly reports broadly provided a mixed picture but both emphasized better compliance to output cuts in March which is price supportive.

Nigeria's crude oil production fell by 156,900 barrels per day (bpd) to 1.269 million bpd in March, from 1.426mbpd recorded in February. Movements in USA oil inventories have an outsized price impact.

The production-cut agreement spurred a change in market structure that meant traders had less incentive to store oil at sea, prompting the flow of supplies floating on ships to onshore sites.

U.S. West Texas Intermediate crude futures CLc1 rose 1 cent to $52.66 a barrel.

Analysts say buying was suppressed by data showing that the USA oil rig count rose for the 13th straight week (http://www.marketwatch.com/story/baker-hughes-data-show-us-oil-rig-count-up-a-13th-week-in-a-row-2017-04-13) in the week of April 13.

"China's domestic oil production declines are worse than expected as mature fields like Daqing and Shengli continue to deteriorate", said Gordon Kwan, head of oil and gas research at Nomura.

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Saudi Arabia recently told OPEC officials that it wants to extend the output pact for another six months when the group meets on May 25 in Vienna, according to The Wall Street Journal.

Saudi energy minister Khalid al-Falih has insisted that there exists a consensus within the organisation to stabilise the oil market and that producers would do whatever was necessary to achieve that goal. While global supplies are rising because of refinery maintenance, the market is rebalancing, he said.

Angola, which has been working hard to remain Africa's top producer, climbed to the top again for being able to maintain a daily production of 1.652 million barrels since January, even though it is a drop from last quarter of 2016 levels of 1.736mbpd.

A preliminary Reuters poll showed analysts expected US crude stocks to have fallen in the week to April 14, building on a surprise decline the previous week.

OPEC said crude oil supply from non-members this year would average 57.89 million bpd due to growing output in the USA and modest declines in Colombia and China.

Any increase in output in the United States, now the world's third-biggest oil producer, will likely put pressure on the Organization of the Petroleum Exporting Countries (OPEC) - which agreed to curb output at the end of previous year - to cut production further.

Highlighting the fact that the demand for Iran's crude exceeds its supply, Zanganeh noted, "We have no worries on selling oil, nor do we intend to wage a price war".

  • Darren Santiago