Oil down 3 percent; producers hint of more output add to glut worry | Reuters - Firstpost
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Oil down 3 percent; producers hint of more output add to glut worry | Reuters

  Updated: Apr 22, 2016 03:30 IST

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NEW YORK/LONDON Oil prices fell 3 percent on Thursday, pausing after a two-day rally, after producers from Russia to Saudi Arabia and Iran to Libya hinted at more output amid growing U.S. crude stockpiles.

Profit-taking and the dollar's steadying from a slide earlier in the week also weighed on crude futures.

Oil markets rose initially when the International Energy Agency, an energy watchdog for the Western world, said non-OPEC production would fall this year by the most in a generation. IEA chief Fatih Birol said low oil prices had cut investment by about 40 percent in the past two years, with sharp falls in the United States, Canada, Latin America and Russia.

But as the session progressed, Russia and major producers in the Organization of the Petroleum Exporting Countries (OPEC)indicated they will raise output, extending their fallout from the weekend meeting in Doha, Qatar, where they could not agree to a production freeze.

The hints at higher production came on top of data from market intelligence firm Genscape that suggested a build-up of more than 840,000 barrels in U.S. crude at the Cushing, Oklahoma, delivery point in the four days to April 19.

Even so, Russian Deputy Energy Minister Kirill Molodtsov said on Thursday that a new initiative for an oil output freeze was likely to emerge in a couple of weeks. OPEC's meeting in June will also focus on such cooperation, senior Saudi oil advisor Ibrahim al-Muhanna said on Thursday.

That led some analysts to be cautious on calling for steeper price slides.

"We see a high probability of fresh highs within the next couple of sessions given an impressive trade this week that has seen the complex shrug off some significant bearish headlines," said Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Associates. [EIA/S]

Brent crude LCOc1 settled down $1.27, or 2.8 percent, at $44.53 a barrel. It had gained 7 percent in two previous sessions.

U.S. crude's West Texas Intermediate (WTI) CLc1 slid $1 to $43.18.

Despite Thursday's slide, Brent and WTI are up about 70 percent from multi-year lows hit between January and February.

"Should we really be at $43 on a WTI basis? Because the closer we get to $45 mark ..., the more you're going to throw a lifeline to U.S. shale producers," said Harry Tchilinguirian, global head of commodity strategy at BNP Paribas.

Russia's energy minister said the country might push oil production to historic highs. Iran reiterated its intention to boost output to 4 million barrels per day. Saudi Arabia and Libya also threatened to raise production.

(This story corrects Brent settlement to $44.53 from $45.53 in paragraph nine)

(Reporting by Barani Krishnan in New York and Sarah McFarlane in London; Editing by Sandra Maler)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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