Oil prices steady after overnight tumble on dollar strength, China concerns

Aug 16, 2017, 15:24
Oil prices steady after overnight tumble on dollar strength, China concerns

State-run refiner Indian Oil Corp. has for the first time bought 950,000 barrels of light sweet Eagle Ford shale oil from the U.S., company officials said Friday. However, WTI crude oil prices once again failed to sustain above the $50 per barrel levels.

The oil market will get its weekly data on US petroleum supplies from the American Petroleum Institute late Tuesday and from the EIA early Wednesday.

The latest American Petroleum Institute (API) inventory data for the week ending August 11th recorded a draw of 9.16 million barrels after the substantial draw of 7.84 million barrels last week.

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West Texas Intermediate for September delivery was at $47.33 a barrel on the New York Mercantile Exchange, down 25 cents, at 8:32 a.m. local time.

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

Last week, the EIA reported a draw in US commercial crude oil inventories of 6.5 million barrels for the week to August 4, but on a more troubling note, the EIA calculated gasoline inventories had gone up by 3.4 million barrels, with daily production averaging 10.3 million barrels, basically flat on the previous week, when refineries processed some 17.4 million barrels of crude daily.

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OPEC won't clear the global oil glut any time soon since any increase in price continues to bolster rival production from USA shale, according to the International Energy Agency.

However, petrol stocks climbed by 301,000 barrels, compared with analyst expectations in a Reuters poll for a 1.1-million barrel decline.

"A mere supply cut is not going to boost prices", said Sukrit Vijayakar, director of energy consultancy Trifecta.

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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.

OPEC output rose by 173,000 bpd a day in July to nearly 32.9 m barrels, its highest level since the production agreement came into force in January. Even so, Citigroup Inc.'s Ed Morse says shale will win over OPEC on oil, as US drillers can survive due to hedging. Flynn also noted that "shale producers will continue to struggle" as oil stays below $50 a barrel. "We had seen in the past few weeks that demand growth was robust, and this turned that on its head".

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