By Scott DiSavino
| NEW YORK
NEW YORK Oil prices fell on Tuesday, rattled by concern over slowing demand, a rising U.S. dollar and increasing U.S. crude output that has shaken investors' faith in the ability of OPEC to rebalance the market.Brent futures LCOc1 were down 55 cents, or 1.1 percent, at $48.79 a barrel by 12:43 p.m. EDT, while U.S. West Texas Intermediate crude CLc1 was down 53 cents, or 1.1 percent, at $45.90.So far this week, the U.S. dollar .DXY has gained about 1 percent against a basket of currencies as it rises to its highest since April 21, pressuring greenback denominated oil.Weekly U.S. data on crude production and inventories, plus monthly reports on supply and demand from the Organization of the Petroleum Exporting Countries (OPEC) and the U.S. Energy Information Administration (EIA) this week, should provide a detailed picture of how quickly global crude inventories are falling.Analysts forecast U.S. crude stocks declined for a fifth week in a row, falling 1.8 million barrels during the week ended May 5, after hitting an all-time high over 535.5 million barrels at the end of March, according to a Reuters poll. [EIA/S]"We really need to see some of the data starting to support the idea that global inventory levels are coming down," Saxo Bank senior manager Ole Hansen said, noting there have also been signs there has been wavering in terms of demand growth.
High U.S. gasoline stocks have fed concern about demand in the United States, where consumer spending expectations hit a three-year low last month and vehicle sales have fallen year-on-year for four months in a row.Coupled with that is faltering manufacturing activity and a drop in commodity imports in China, the world's second-largest economy and biggest raw materials consumer.Top oil exporter Saudi Arabia said Monday it would "do whatever it takes" to rebalance a market that has been dogged by oversupply for over two years.
Saudi Aramco will curb oil supplies to Asia by about 7 million barrels in June, a source with direct knowledge of the matter said."Although OPEC is apparently putting on a renewed push to support values, this looks like the only significant bullish consideration currently available to the energy complex," Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates, said in a note.Even though OPEC has stuck to its pledge to cut production, U.S. output C-OUT-T-EIA has risen by more than 10 percent since mid-2016 to 9.3 million barrels per day in 2017 and a forecast all-time high of 10.0 million barrels in 2018, boosted by the shale sector and close to the output of Russia and Saudi Arabia.
"U.S. oil production surpassed expectations in terms of an early bottoming and swift uptick, and is set to expand further based on the latest drilling momentum," said Norbert Ruecker, head of macro and commodity research at Julius Baer. "We see prices between $45-50 per barrel as fundamentally justified. Consequently, we have raised our view to neutral from bearish and closed our short position. An extension of the supply deal beyond June looks likely but its effectiveness will remain questioned."Other nations, like Libya, have also increased oil output in recent months.Libyan oil production has risen to just below 800,000 bpd - its highest since 2014 - as the OPEC member pushes up production from the newly restarted Sharara and El Feel fields, a Libyan oil source told Reuters. (Additional reporting by Amanda Cooper in London and Henning Gloystein in Singapore; Editing by Marguerita Choy and Jason Neely)
This story has not been edited by Firstpost staff and is generated by auto-feed.
Published Date: May 09, 2017 11:30 pm | Updated Date: May 09, 2017 11:30 pm