Oil Trades Near $53 After US Crude Supplies Climb to Record

Oil Trades Near $53 After US Crude Supplies Climb to Record

USA crude futures were recently unchanged at $53.20 a barrel on the New York Mercantile Exchange. "If production cuts are coming through as suggested, we should see oil prices push higher", ANZ bank said on Monday.

Oil prices continue to slip in Asian trade, being affected by a stronger dollar and higher than expected growth in United States oil inventories.

Has the market become range bound?

13 de febrero de 2017, 12:04London, Feb 13 (Prensa Latina) Oil prices dropped today before the rise in extraction of USA platforms, dealing a blow on the OPEC agreement and of nations outside the entity to reduce global inventories.

USA dollar surged strongly to the highest level over last three weeks after Yellen's optimistic comments related to the interest rate hike, and as history has it, a stronger dollar makes oil prices more costly for consumers using various currencies. As per the U.S government data, U.S shale production is all set to increase to its highest levels in five months.

Oil prices and the dollar are typically in an inverse correlation. "A floor is being formed by the production reduction agreed by OPEC and several non-OPEC oil producers. But lessons from the past have made the market deeply suspicious", van Cleef at ABN said.

Crude Oil trading at $ 52.88 is unlikely to trade below $50 per barrel.




The International Energy Agency (IEA) said last week that the initial rate of compliance with a landmark deal to reduce the global oil glut was 90 percent. The market has largely priced in these production cuts OPEC and other producers agreed to in November, said Tariq Zahir, managing member of Tyche Capital in NY.

Victor Shum, VP of IHS Energy Insight, highlighted the inherent self-interest of the Organization of the Petroleum Exporting Countries' (OPEC) output reduction agreement - and the danger it poses to the global market - on Tuesday by noting that if oil prices falter, cartel members who are now earning vigorous praise for their high compliance will resume pumping, thus causing the opposite of what the agreement was supposed to do: reduce oversupply and bring about market re-balance.

- Among the OPEC members who have committed to production quotas, total output in January was 29.9 million bbl/day. And, out of the total 558,000 barrels per day, Russian Federation had agreed to reduce its production by 300,000 barrels per day in a gradual manner. Russian Federation has reduced some 100,000bpd in the month of January.

US oil production has been rising, and held steady at just under 9 million barrels a day last week. OPEC's forecast for 2017 is down slightly from the 1.3 million bpd estimated for 2016, during which oil demand in OECD Europe, OECD Asia Pacific and other Asia was "better-than-expected" due to increased demand in the petrochemical and transportation sectors.

The durability of the deal, then, may depend on how long Saudi Arabia, which has historically played the market's "swing producer" role to help keep the market balanced, will be amenable to covering for any members not hitting their target.

I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article.

Related news:

Hot News

isis-killer-beheading-video-story-top PFA defends its support of ex-footballers suffering from dementia
Feb 16, 2017 - 01:20
While the study was limited in size, it marks the first time that CTE has been confirmed in a group of retired soccer players . CTE has most commonly been found in players that participated in contact sports and sustained repeated concussions.

Kremlin suggests possible Trump-Putin meeting before G20 in July
Feb 16, 2017 - 01:18
The two sides recently had a phone conversation, that was assessed by many in Moscow and in Washington as a " good start ", and a significant shift in dialogue.

isis-killer-beheading-video-story-top Casemiro Unleashes Wonder Strike To Help Real Madrid Put Away Napoli
Feb 16, 2017 - 01:18
Hamsik could have made Real pay five minutes later but he fired just wide with a good chance from an Insigne cross. Toni Kroos put the hosts ahead early in the second half, before a stunning volley from Casemiro sealed the win.

isis-killer-beheading-video-story-top Nintendo manager hints at GameCube virtual console on Switch
Feb 16, 2017 - 01:17
The Nintendo 3DS or the New 3DS would still keep its dedicated consumers not just because it has more games. Check it out below, and prepare to have fun with the Switch when it debuts on March 3 for $299!

isis-killer-beheading-video-story-top Russian planes buzzed USA warship in Black Sea, defense official says
Feb 16, 2017 - 01:17
Konashenkov was surprised to hear the United States military were astonished to see Russian fighters so close to Russian borders. The incident "was deemed unsafe and unprofessional because of various factors including low altitude and high speed", said Lt.

isis-killer-beheading-video-story-top North Atlantic Treaty Organisation allies must pay more or U.S. will 'moderate its commitment': Mattis
Feb 16, 2017 - 01:16
Flynn quit over allegations he had discussed United States sanctions with Russia's ambassador before taking office. But Trump has made change a priority, saying allies have "been very unfair to us" for not spending more.

isis-killer-beheading-video-story-top Egg-shaped taxi drone to ferry passengers around Dubai by JULY
Feb 16, 2017 - 01:14
If something bad does happen, such as a set of electric motors going offline, the vehicle can still operate a normal flight plan. Since its cargo is a lot more valuable than a camera, too, there's unsurprisingly more safety technology onboard.

Boy, 10, dies in furniture incident at Topshop
Feb 16, 2017 - 01:14
Bunches of flowers were left against the shop's closed shutters yesterday with passers-by pausing to look at the tributes. Topshop's board and staff said they were "deeply saddened" by the "horrific" incident. "Absolutely shocking news.

isis-killer-beheading-video-story-top Janet Yellen: Delaying interest rate hikes "unwise"
Feb 15, 2017 - 01:00
But based on her comments on Tuesday, Yellen and Trump officials are likely to disagree about precisely what to do next. His resignation, effective in early April, will create a third vacancy on the seven-member board for Trump to fill.

33 killed after coach overturns in Taiwan
Feb 15, 2017 - 01:00
Mr Lee told The Straits Times that the bus was in "good condition" and had passed a maintenance inspection last month. But a Travel Agent Association of Taiwan spokesman said the driver had "sufficient rest", AFP reported .

Cars catch fire in Disneyland parking structure, no word on cause
Feb 15, 2017 - 00:58
The cause of the fire is now under investigation, but there is nothing to suggest foul play at this time. The fire, which was on the second level of the structure, was extinguished in less than 30 minutes.

Cigna Sues Anthem For $15 Billion
Feb 15, 2017 - 00:57
Ana Gupte, an analyst with Leerink Partners wrote the deal was viewed "as completely dead at this point" in a note last week. Both companies would have combined to form the second-largest health insurer in the US.

Elon Musk's Vision of the Future Includes Cyborgs
Feb 15, 2017 - 00:57
In Musk's mind, the human mind needs to evolve to be able to access information quickly and tap into artificial intelligence. The agreement was announced at the World Government Summit this week in the United Arab Emirates.

Eurozone Economy Expands Less Than Estimated
Feb 15, 2017 - 00:57
The index for investors' future expectations fell by 6.2 points to 10.4 points last month, Mannheim-based ZEW said in a statement. Still, it marked a sharp rebound after the German economy barely expanded over the summer months.

NASA will hunt for alien life on Jupiter moon Europa
Feb 15, 2017 - 00:55
Then, they will collect data which will help them in the preparation for an actual landing on the icy moon of Jupiter. The lander would be quite busy during its brief operational life, as its proposed instrument payload indicates.