Saudis, Other Gulf Oil Producers May Cut US Exports As Supply Swells

by Abel Hampton March 25, 2017, 0:58

US crude futures settled down 0.7% at $47.70 a barrel, and Brent crude dipped 0.2% to $50.56. Brent was heading for a weekly fall of about 2.1 per cent, while WTI was off about 1.9 per cent. USA crude rose 18 cents, to 47.88 dollars a barrel.

Analysts said the gains were a sign that the crude benchmarks, trading roughly 12 percent below the highs reached in January this year, had levelled out. "A lot of the negativity has been priced in", said Olivier Jakob, managing director of PetroMatrix.

In the United States, overseas oil suppliers like Saudi Arabia have to compete against rising shale drilling, which has pushed up USA oil production by more than 8 percent since mid-2016.

A Saudi energy official said late Thursday that the kingdom's crude exports to the March have fallen by around 300,000 barrels a day, in line with the cuts agreed under the OPEC output deal, according to Reuters.

Saudi exports to other regions, notably Asia, remained elevated despite the OPEC-led deal that includes other producers like Russian Federation to cut output by 1.8 million bpd during the first half of the year.

That was near double the 2.8 million inventory build expected, and left stockpiles at the highest level on record.

"Opec has done their part, but United States inventory data is still rising, keeping the lid on the oil price", said Aslam, commenting there were no signs of a demand shock for crude and for the price to rise further and start a new journey.

Unless OPEC extends the curbs beyond June or makes bigger cuts, traders say oil prices are at risk of falling further. If there is going to be turnaround in the market it is going to have to come from an effort by OPEC.

Dennis Gartman, founder and editor of the Gartman Letter said the longer-term outlook was for continuing low oil prices.

Oil has been on the back foot for more than two weeks now, after a string of USA inventory reports suggested that output cuts by the Organisation of the Petroleum Exporting Countries were not having the desired effect in reducing global oversupply.

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