Oil Prices Give Up Gains As Crude Supply, Production Rise

Oil Prices Give Up Gains As Crude Supply, Production Rise

Oil Prices Give Up Gains As Crude Supply, Production Rise

As it had done in several consecutive monthly reports, OPEC lifted again on Wednesday its estimates for non-OPEC oil supply growth this year, but this time the cartel's estimates that for the first time, rival oil supply growth led by the US will outpace global oil demand growth in 2018.

Oil prices have firmed since oil cartel OPEC's November 2016 agreement to cut oil production by 1.2 million barrels per day (bpd), while non-OPEC members, led by Russian Federation, agreed to reduce output by 558,000 bpd.

Moody's Investors Service has raised its medium-term price band for crude oil to US$45-US$65 per barrel from US$40-US$60 per bbl, as continued Opec-led production restraint and strong global demand growth contribute to declining global inventories, offsetting rapid increases in United States shale production.

Meanwhile, the American Petroleum Institute was said to report that U.S. crude stockpiles rose 1.16 million barrels in the week through March 9. U.S. West Texas Intermediate (WTI) futures were up six cents at $60.77 a barrel. The API data also showed gasoline stocks fell by 1.3 million barrels, while distillates fell by 4.3 million barrels.

Brent crude was last up eight cents at $64.72 US a barrel, climbing from an earlier low of $64.43. At the same time, crude oil throughput rose 7.3% to 93.4 million tonnes, implying a need for more imports. A broader market slump initially drove prices lower, while surging American production and increasing inventories remain a challenge.

China's industrial output grew 7.2% in the first two months of the year compared with the same period last year, beating expectations of a 6.1% hike. Prices have not returned to their January highs of over US$70 per barrel for Brent and nearly US$67 for WTI.

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Weekly US crude production figures will be published by the Energy Information Administration (EIA) later on Wednesday.

Venezuela's oil production plunged by another 52,400 bpd in February over January and averaged 1.548 million bpd last month.

Cartel members' production went down 77,000 bpd from January to February, the report said, citing secondary sources.

The Organisation of Petroleum Exporting Countries acknowledged the scale of the shale boom, forecasting for the first time that supply growth from rivals will outstrip the increase in demand this year.

USA oil production C-OUT-T-EIA is expected to top 11 million bpd later this year.

That would be a reversal from a supply deficit in 2017 and early 2018.

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