Published: Fri, April 21, 2017
Business | By Max Garcia

Oil prices regain some ground, but oversupply weighs

Oil prices regain some ground, but oversupply weighs

Crude futures were trading more than 30 cents higher in Asia early Thursday, but the recovery, against a rout of almost $2/barrel at the previous day's close, was more likely bargain-hunting than the start of a full correction, as the weekly counter-seasonal build in USA gasoline inventories continued to weigh on market sentiment.

James Williams, president of energy consultant WTRG Economics in London, Arkansas, said the minister's bullish statement did not lift prices much because of growing USA shale production. Stocks have dropped sharply in the last several weeks and have fallen below levels seen at this time a year ago, but are still higher than where inventories have been in this decade.

The WTI crude oil price and the product spot prices were not available due to the market closure on Friday.

Other geopolitical concerns have supported oil prices. This is part of the production cuts that the oil-producing kingdom had agreed to as a member of OPEC.

At a press conference in the United Arab Emirates, Saudi Energy Minister Khalid al-Falih said that "there is consensus building but it's not done yet".

USA crude imports rose last week by 56,000 barrels per day.

Both benchmarks had traded more than 50 cents higher earlier in the day, but gains eased at the start of US trading hours. US crude inventories were at 532.3 million barrels, which is only 3 million less than the new March record.

According to data the single countries report to the Joint Organizations Data Initiative (JODI), Saudi Arabia's crude oil exports in February stood at 6.957 million barrels per day, the lowest volumes shipped in a month since May 2015 when exports were 6.935 million bpd.

"Rising oil output in the USA remains the predominant bearish factor for prices despite growing anticipation that OPEC will extend a self-imposed cap on its oil production in the upcoming May meeting", Abhishek Kumar, senior energy analyst at Interfax Energy Global Gas Analytics said recently.

"The rebalancing in USA crude stocks may have got under way, but concerns about further gasoline builds are rife even as the US summer driving season shifts up a gear", said Stephen Brennock, an analyst with PVM Oil Associates.

"Five of the last trading days we've been lower", he said.

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