Oil Prices Slide As Inventories Continue To Build (USO)
Feb 09 2018 by Cristina Jennings
U.A.E. crude production was 2.85 million barrels a day in January.
Futures dropped as much as 0.8% in NY, briefly slipping below $63/bbl for the first time in more than two weeks. On that note, let's move to the oil/gasoline market instead.
Supporting the crude oil markets, the expanding global economy has increased demand for commodities and drawn down oil inventories. The U.S. benchmark for the price of oil, West Texas Intermediate, was up 0.06 percent to $61.84 per barrel. The 700,000-barrel cargo, Bloomberg reports, was bought in December from US-based Enterprise Product Partners.
In the two years since Washington lifted a 40-year ban on oil exports, tankers filled with US crude have landed in more than 30 countries, ranging from massive economies like China and India to tiny Togo.
Clearly, the data points to an imbalanced market and oil prices have responded by turning sharply lower, he added. American Petroleum Institute data Tuesday showed an unexpected decrease in U.S. stockpiles, while on Wednesday U.S. equity futures fell and the dollar rose.
The EIA also forecast that USA output will average 10.6 million bpd this year, enough to continue surpassing Saudi Arabian output. In 2016, the average spread was less than $1/b.
As for Russia, Moscow is likely to keep its compliance rate close to 100 percent in 2018.
Meanwhile, U.S. production is growing, and the latest Short-Term Energy Outlook by the Energy Information Administration projects the daily average to reach 11 million bpd earlier than previously expected.
Oil prices fell sharply on Wednesday after data showed rising USA crude stockpiles.
America's growth in the production of natural energy resources is unprecedented after only one year under the Trump administration - with the USA quickly ascending to become a world leader.
The cooperating countries are already conceding market share to the shale producers, in a re-run of the situation before oil prices slumped in 2014.
"It's the fourth-largest OPEC producer's first cargo of US oil, according to Energy Information Administration data", Bloomberg informed.
Does It Matter Where the Glut Sits?
Crude inventories in the United States C-STK-T-EIA have fallen by 20 percent since hitting record highs in April 2017.
For the past week, crude imports averaged 7.9 million barrels a day, down by 500,000 compared with the previous week.
However, the same logic can not be applied to the gasoline market. The build was a hefty 3.4 million barrels, following three weekly builds since the start of 2018 and one weekly draw, of 2 million barrels, reported last week. Gasoline inventories dropped by 227,000 barrels and distillate stockpiles jumped by about 4.55 million barrels. The disparity between the oil and gasoline inventory actually paints a picture of a weak oil market as well as the broader economy.