Finance

Oil Drops On Rising US Crude Inventory, Defies Expected Supply Cut Extension

Oil Drops On Rising US Crude Inventory, Defies Expected Supply Cut Extension

"Unfortunately for OPEC, it takes USA shale oil producers four quarters to respond to higher crude oil prices on the screen", the note said.

Oil prices fell 1 percent on Wednesday after data showed an increase in USA crude inventories, stoking concerns that markets remain oversupplied despite efforts by top producers Saudi Arabia and Russian Federation to cut output.

UBS oil analyst Giovanni Staunovo said he saw a 60 percent probability of OPEC extending output cuts.

U.S. West Texas Intermediate (WTI) crude futures were at $48.10, down 57 cents, or 1.1 percent, from their last settlement.

Both benchmark prices started the day in negative territory after data from the American Petroleum Institute estimated that USA crude stocks had risen by 882,000 barrels.

"Opec ministers likely will continue to talk oil higher, there is more chatter on the discussion and that means there will be more volatility in prices", said Giovanni Staunovo, an analyst at UBS in Zurich.

Swedish prosecutor drops rape probe into WikiLeaks' Assange
She accused him of having sex with her as she slept without using a condom despite repeatedly having denied him unprotected sex. Friday was the deadline for the Swedish prosecution to send a request to Stockholm District Court in the Assange case.

Oil producers have been trying to boost prices, as crude futures trade around $50 a barrel, less than half their level from early 2014, though above the low of below $30 in early 2015.

Crude rebounded after Algeria said a nine-month extension to OPEC's production curbs would be backed by most participating countries.

The current OPEC, non-OPEC six-month production deal to take 1.8 million barrels a day off the market, is winding down, but looks sure to be re-ignited when OPEC ministers meet with their non-OPEC colleagues in Vienna next Thursday. The contract earlier rose to the highest since April 21 and is on track for a almost 4 percent climb this week, its second week of gains.

"The big shift - and what I think OPEC is trying to generate - is a shift in the curve to backwardation, where spot prices sit above forward prices", Currie told CNBC's "Power Lunch" on Wednesday.

In figures reported last Friday, oilfield servcies firm Baker Hughes said USA drillers added 9 oil rigs to take the total to 712, rigs for the 17th weekly gain in a row and extending an 11-month drilling recovery to the highest level since August 2015, implying that further gains in domestic production are ahead. To compare, OPEC and its partners agreed to cut 1.8 million bpd from global daily supply.

Nigeria's crude oil production declined in February, when Nigeria's subsidiary of Royal Dutch Shell Plc shut down the Nembe Creek Trunk Line, which exports Bonny Light crude oil, in order to remove theft points. Production by US shale producers has been the crude market's biggest bugaboo.


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