Oil prices struggle on doubts OPEC can rein in oversupply

Judith Bessette
Junho 19, 2017

Oil prices were down more than half a percent after hitting a six-month low on Thursday, remaining under pressure from high global inventories and fears that OPEC's agreed production cuts can not offset rising production elsewhere.

Rising non-Opec output has dented Opec and its allies' global pact to reduce oversupply in the market, which has pressured prices for almost three years.

Since late last month, oil prices have dropped by more than 12%.

Oil prices tumbled to the lowest level in seven months Wednesday, as high oil inventories continued to erode confidence in the ability of major producers to ease a global supply glut.

Crude prices drifted barely weaker oi Friday in Asia with investors eager to see if USA shale drillers keep pouring on the heat for OPEC and allies or whether recent price falls bring a pause.

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Oil prices settled lower for a second straight day on Thursday, as the market was unable to rebound from Wednesday's decline on the back of a surprise build in USA gasoline inventories and ongoing worries about heavy global supply. US West Texas Intermediate (WTI) crude futures were down 8 cents, or 0.2 per cent, at $44.38 per barrel. "Oil production in the US was. higher (and) oil tanker tracker data also suggests OPEC shipments remain strong", ANZ bank said.

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It added that the agency has published a forecast stating that the global refinery throughput is expected to go up by 2.7 million bpd between July and August, with refineries processing nearly 82 million bpd for the same period.

USA light crude was down 25 cents at $44.48, also not far off six-month lows.

Shale supply has pushed U.S. crude production up by about 10 per cent over the previous year to 9.3 million bpd, not far below the output of top exporter, Saudi Arabia.

That compares with analysts estimates in a Reuters poll for a 0.5 million barrel draw in gasoline stocks and a 2.7 million barrel draw in crude inventories.

USA energy companies added oil rigs for a record 22nd week in a row, energy services company Baker Hughes said on Friday.

The International Energy Agency (IEA) said this week that oil supplies next year would still outpace demand despite consumption hitting 100 million bpd for the first time. Libya and Nigeria, which are exempt from Opec's cuts, ramped up production in May, helping push the cartel's crude production to an average of 32.14m barrels per day (bpd), up from 31.8m bpd in April.

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