Oil edges lower after
move on exporters' move speculation
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[August 12, 2016]
By Julia Payne
LONDON (Reuters) - Oil prices fell
slightly on Friday, remaining near the previous day's highs, on the
prospect of talks by exporters about ways to prop up a market
grappling with a supply overhang.
Brent crude futures were down 19 cents a barrel higher at $45.84 per
barrel by 1000 GMT (0600 ET), from a three-week high of $46.66
earlier in the day.
U.S. West Texas Intermediate (WTI) crude stood at $43.41 a barrel,
down 8 cents after touching its highest level since July 25, at
$44.17 per barrel.
Both price benchmarks rose more than 4 percent on Thursday after
Saudi Arabia's energy minister Khalid al-Falih said that oil
producers would discuss potential action to stabilize oil prices
during a meeting next month in Algeria.
"Yesterday was a big move in reaction to the Saudi oil minister's
comments. Now today there is a reassessment but the comments are
probably not enough to trigger a sustained rally," Olivier Jakob of
consultancy Petromatrix in Zug, Switzerland said.
An outlook published by the International Energy Agency (IEA) that
said it expected the supply and demand balance to tighten towards
year-end also supported prices.
Traders said a drop of 8.1 percent in China's oil output in July, to
a five-year low of 16.72 million tonnes, also lifted prices because
it would mean Asia's biggest economy has to import more crude.
Despite the output fall in China, the world's biggest energy
consumer, the market impact is mixed as its refined product exports
"To be bullish, there would also need to be a drop in refining
output," Jakob of Petromatrix said.
Oil prices are still more than 12 percent below their last peak in
June, as brimming storage tanks and production that exceeds
consumption weighs on markets.
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A man stands close to the Cardon refinery, which belongs to the
Venezuelan state oil company PDVSAn in Punto Fijo, Venezuela July
22, 2016. REUTERS/Carlos Jasso
Iran slashed its September official selling price for light crude to Asia by
$1.30 a barrel, the latest sign that exporters are willing to accept discounts
in return for market share.
AB Bernstein said global oil production rose almost 0.8 million barrels per day
(bpd) in July from the previous month, to 97.01 million bpd, while commercial
inventories increased by 5.7 million barrels to 3.09 billion barrels in June.
Despite cheap crude feedstocks prices, analysts said refinery margins, known as
cracks, were poor as refiners continued to make more fuel than the market can
For July, Bernstein put Brent cracking margins at $3.02 per barrel (down $1.83
from June); U.S. Gulf Coast cracking margins at $5.06 a barrel (down $0.03); and
Singapore cracking margins at $4.74 per barrel (down $1.03).
(Additional reporting by Henning Gloystein; Editing by William Hardy)
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