The Sunday News
Oil headed for a weekly loss as Organisation of Petroleum Exporting Countries (Opec) and its allies prepared to meet for a review of their production cuts, while swelling US inventories indicated the measures aren’t working yet.
Futures rose 0.8 percent in New York, trimming the weekly loss to 1.5 percent. US crude output continued to expand along with inventories last week, data from the government showed on Wednesday.
While Opec won’t formally decide until May whether to prolong a production-cut deal aimed at easing a global glut, officials will meet this weekend in Kuwait to discuss its progress.
Oil this week slid to the lowest since November as rising US inventories and increased drilling activity continued to counter output cuts by the Opec and other producers.
Opec will extend the deal if stockpiles are still above their five-year average, Saudi Arabian Energy Minister Khalid Al-Falih said in a Bloomberg interview last week.
“Opec pushed an extra 1.5 million barrels a day of exports and production really late into last year, that’s the effect we’re seeing now,” Amrita Sen, chief oil analyst at Energy Aspects, said in a Bloomberg television interview.
“You’re going to start seeing the effects of the cuts pretty much from next week onwards.”
West Texas Intermediate for May delivery was up 37 cents at $48.07 a barrel on the New York Mercantile Exchange at 12:29 in London.
Front-month futures closed at $47.34 on Tuesday, the lowest settlement since November 29. Total volume traded was about 39 percent below the 100-day average.
Brent for May settlement added 28 cents to $50.84 a barrel on the London-based ICE Futures Europe exchange. Prices fell 8 cents to $50.56 on Thursday, the lowest close since November 30.
The global benchmark traded at a $2.82 premium to WTI.
US crude production expanded for a fifth week to 9.13 million barrels a day last week, the longest run of gains since January 2016, according to Energy Information Administration (IEA) data.
Nationwide stockpiles increased by 4.95 million to 533.1 million barrels in the week ended March 17. Inventories are at the highest level in weekly EIA data compiled since 1982.
Opec’s supply cuts are providing a windfall for producers of heavy crude from western Canada and the Gulf of Mexico.
TransCanada said it has been granted a US permit for the Keystone XL pipeline to the American heartland following approval by President Donald Trump, Russia and Saudi Arabia head to this weekend’s Opec committee meeting as the tortoise and hare of a global deal to cut oil supply, with Moscow sticking to a slow and steady pace despite Riyadh’s cajoling.
– Online
