Crude Oil Rally Has Fizzled

by Susie Olson August 16, 2017, 15:22
Crude Oil Rally Has Fizzled

Oil's moves are reflective of the "tight trading window we're in right now", he said.

The U.S. Energy Information Administration report on oil inventories is due on Wednesday at 10:30 a.m. EDT.

Futures fell 0.8% in NY after Monday's 2.5% decline, the biggest drop in more than five weeks.

U.S. crude inventories fell by 9.2-million barrels in the week to August 11 to 469.2-million, industry group the American Petroleum Institute said on Tuesday.

The draw compares to analyst expectations of a draw of 3.6 million barrels for the week ending August 11.

US West Texas Intermediate (WTI) crude futures were at $47.71 a barrel, up 16 cents, or 0.3 per cent.

"The market took this as a mildly bullish report", said William O'Loughlin, investment analyst at Rivkin Securities.

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International Energy Agency (IEA) in its monthly oil market report indicated that it is not just Libya and Nigeria but the participating countries have produced nearly 470,000 barrels of crude per day, beyond the agreed level.

Sarah Emerson, energy principal at ESAI, remarked, "If OPEC wants to keep oil prices in the $50s and hit $60, the organization will have to keep a lid on supply for several more years". Not a lot has changed despite the Opec and Russian Federation efforts recently.

In a report Monday, the EIA said it expects to see a climb of 117,000 barrels a day in September to 6.149 million barrels a day The report has shown increases in shale-oil production every month so far this year.

"Excessive supply.is continuing to weigh on oil prices".

Atkinson's seeming change of heart notwithstanding, all parties agree on one thing: OPEC faces an uphill battle in achieving any sort of gains on production cutbacks: Bloomberg notes that both Total SA and Weatherford International Plc believe a reasonable crude market might not return until the end of the decade.

The Organization of the Petroleum Exporting Countries together with non-OPEC producers such as Russian Federation have pledged to restrict output by 1.8 bpd between January this year and March 2018. The compliance outside the OPEC is even worse at just 67 percent. On the demand side, analysts also see a gradual slowdown in consumption growth as petrol demand peaks in the United States due to improving fuel efficiency and the rise of electric vehicles, while China's voracious oil thirst also starts to taper off.


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