Oil Prices Drop As Saudis Say Too Early To Decide Cuts Extension

Apr 20, 2017, 08:53
Oil Prices Drop As Saudis Say Too Early To Decide Cuts Extension

The surprise gasoline build, along with an increase in USA production and imports from OPEC nations, pressured prices.

In contrast to last week's reports that Saudi Arabia would be willing to extend the production cuts with which OPEC is trying to "fix" the global oversupply and lower-for-longer oil prices, The Wall Street Journal reported on Tuesday that Saudi Arabia's Energy Minister had told reporters in Riyadh on Monday that "it is premature to talk about extending the cut".

Oil edged lower on Wednesday, after USA data showed a smaller-than-expected decline in overall crude inventories coupled with another rise in production, hindering OPEC's efforts to reduce a global surplus of crude.

May West Texas Intermediate crude CLK7, -3.95% lost 15 cents, or 0.3%, at $52.26 a barrel on the New York Mercantile Exchange.

Inventories have been heading back down in the US and dropped by 1 million barrels in the latest week, the Energy Information Administration said Wednesday, a smaller drop than expected.

A global crude glut has persisted even as the Organization of the Petroleum Exporting Countries and other producing countries have worked to reduce output under an agreement to cut supplies nearly 1.8 million barrels per day in the first half of 2017. Oil prices jumped by more than 10 per cent following the deal with worldwide benchmark Brent crude now trading above $55 per barrel. Output in the lower-48 states rose 21,000 barrels a day to 8.72 million, also the highest since August 2015.

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Official sources from South Korea and the U.S. confirmed North Korea had attempted to launch a missile on Sunday, but had failed. The statement wanted the United Nations demands North Korea conducts no further tests.

Since sanctions were removed in January 2016, Iran's oil production has climbed 35%, according to data compiled by Bloomberg.

Now the deal's participants must weigh whether another such agreement is worth it, given that any price increases would spur more USA production.

US crude futures tumbled following the EIA data release, off $2.7% to $51 a barrel.

Demand for petroleum products was down slightly from a year ago.

"We should see an accelerating level of crude draws, something we've been waiting for a while", Cavan Yie, senior equity analyst at Manulife Asset Management Ltd.in Toronto, said by telephone.

The gain pushed gasoline stockpiles to 237.7 million barrels in the week ended April 14, leaving them 21 million barrels higher than average for the date over the last 10 years.