Oil steadies after big fall, but soaring US crude output weighs

SINGAPORE: Oil prices steadied on Thursday, supported by healthy demand, after falling the previous day under pressure from record US crude production and rising inventories. Brent crude futures LCOc1 were at $64.36 per barrel at 07:58 GMT, up 2 cents, or 0.03 per cent, from their previous close. That slight rise came after a fall of more than 2 per cent the previous day.
US West Texas Intermediate (WTI) crude futures CLc1 were at $61.16 a barrel, up 1 cent, or 0.02 per cent. WTI also fell by more than 2 per cent the previous session.
The steadier prices on Thursday followed a US crude inventory build that was not as big as expected during the current seasonal demand lull at the end of winter, when many oil refineries shut down for maintenance.
“Oil prices bounced back immediately after the release of the weekly oil inventories data from the Energy Information Administration … (where) the headline figure was better than expected,” said Fawad Razaqzada, market analyst at futures brokerage Forex.com.
The EIA reported late on Wednesday that US crude inventories rose by 2.4 million barrels in the week to March 2, to 425.91 million barrels, less than the 2.7 million barrel increase analysts had forecast. On the demand side, US bank Goldman Sachs said in a note to clients dated March 7 that the outlook remained for healthy growth, despite recent signs of a slight economic slowdown. “A still robust growth outlook for 2018 and the recent pattern of 2Q demand acceleration all leave us reiterating our 1.85 million bpd 2018 global oil demand growth forecast,” the bank said.
Despite this, soaring US production, which last week marked another record, at 10.37 million barrels per day (bpd), is looming over oil markets.
“Crude is … under pressure from rising US production which hit a new high last week, now firmly above Saudi Arabia’s production level,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.
At just below 11 million bpd, only Russia produces more than the United States, although the International Energy Agency (IEA) expects even this to change as the United States is set to surge past 11 million bpd by late 2018. — Reuters