Oil edges up as Saudis cut
supplies to U.S., but global glut remains
Send a link to a friend
[March 24, 2017]
By Libby George
(Reuters) - Oil edged higher on Friday, boosted by hopes that an OPEC
output cut was beginning to balance a long-oversupplied market, but
benchmark prices were on track for weekly losses as concerns persisted
over an excess of crude.
Benchmark Brent crude futures <LCOc1> were at $50.86 per barrel at 1040
GMT (6:40 a.m. ET), up 30 cents from their last close.
U.S. West Texas Intermediate (WTI) crude futures <CLc1> were up 30 cents
at $48 a barrel. Brent was heading for a weekly fall of roughly 1.7
percent, while WTI was off just over 1.5 percent.
Analysts said the gains were a sign that the crude benchmarks, trading
roughly 12 percent below the highs reached in January this year, had
"The flat price is starting to bottom. A lot of the negativity has been
priced in," said Olivier Jakob, managing director of PetroMatrix.
Saudi Arabia said its crude exports to the United States would fall by
around 300,000 barrels per day (bpd) between February and March,
boosting price sentiment. It said the expected drop could help draw down
U.S. inventories that stood at a record 533 million barrels in the week
to last week.
In the United States, shale drilling has pushed up oil production
<C-OUT-T-EIA> by more than 8 percent since mid-2016 to just above 9.1
million bpd. But U.S. shale producers have left a record number of wells
unfinished in Permian, the largest oilfield in the country, a sign that
output may not rise as swiftly as drilling activity would indicate.
Still, Saudi exports to other regions remain high despite an effort led
by the Organization of the Petroleum Exporting Countries, and supported
by other producers including Russia, to cut output by 1.8 million bpd
during the first half of the year.
[to top of second column]
A fisherman pulls in his net as an oil tanker is seen at the port in
the northwestern city of Duba April 20, 2013. Picture taken April
20. REUTERS/Mohamed Al Hwaity
Thomson Reuters Eikon data shows OPEC shipments to Asia, the world's
biggest and fastest growing oil consuming region, were at 17.6 million
bpd in March, up more than 5 percent since January, when the cuts
Unless OPEC extends the curbs beyond June or makes bigger cuts, traders
say oil prices are at risk of falling further.
"OPEC's goal of drawing down inventories to normal levels is not going
to be reached before their agreement expires on June 30," said U.S.
investment bank Jefferies in a note to clients.
Dennis Gartman, founder and editor of the Gartman Letter said the
longer-term outlook was for continuing low oil prices.
"This slump is very real ... Fracking has only just begun here in the
U.S. and it will be transferred swiftly to other countries abroad, so
the supply of crude oil is going to increase rather dramatically in the
years to come," he told the Reuters Global Markets Forum on Friday.
(Additional reporting by Henning Gloystein; in Singapore, editing by
[© 2017 Thomson Reuters. All rights
Copyright 2017 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.