Oil Trades Near $45 As U.S., Libya Pump Into Oversupplied Market

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SINGAPORE: Oil prices nudged higher early on Thursday, supported by strong demand in the United States, but analysts cautioned that the outlook was for lower prices due to oversupply.

Brent crude futures, the international benchmark for oil prices, rose 28 cents, or 0.6 percent, to $48.07 per barrel by 0132 GMT (9.32 p.m. ET).

U.S. West Texas Intermediate (WTI) crude futures were at $45.39 per barrel, up 26 cents, or 0.6 percent.

Traders said the gains reflected firm fuel demand in the United States, where data from the American Petroleum Institute (API) late on Wednesday showed that U.S. crude inventories fell by 5.8 million barrels in the week to June 30 to 503.7 million.

However, overall market conditions remain weak.

Crude prices tumbled about 4 percent on Wednesday on rising exports by the Organization of the Petroleum Exporting Countries (OPEC), despite its pledge to hold back production between January this year and March 2018 to prop up prices.

OPEC's oil exports rose for the second month in a row in June, according to Thomson Reuters Oil Research.

OPEC exported 25.92 million barrels per day (bpd) in June, 450,000 bpd above May and 1.9 million bpd more than a year earlier.

Energy research house and brokerage firm Sanford C. Bernstein said it was reducing its average Brent crude oil price forecasts for 2017 and 2018 to $50 per barrel each, down from $60 and $70 previously.

Bernstein said that the reduction was a result of an expected increase in U.S. shale oil output, especially from the Permian field.

"Permian supply pummels our near term estimates," Bernstein said, adding that conventional supply additions would likely exceed or match production declines of mature fields.

Denmark's Saxo Bank said that oil prices could rise toward $55 per barrel in the coming months, but said it expected lower prices toward the end of the year and into 2018.

"The price of Brent crude oil is likely to rally back toward $55 per barrel during the coming months before renewed weakness sets in as the focus turns to 2018 and the potential risk of additional barrels hitting the market if OPEC and Russia fail to extend the production cut deal beyond Q1 2018," Ole Hansen, Head of Commodity Strategy at Saxo Bank, said in a quarterly market outlook. - Reuters

Earlier Report:

Oil price slides as OPEC exports rise, prices end eight days of gains

NEW YORK: Oil prices tumbled about 4 percent on Wednesday, ending their longest string of daily gains in more than five years, as climbing OPEC exports and a stronger dollar spurred selling.

Brent crude futures settled down $1.82, or 3.7 percent, at $47.79 a barrel. Prices had climbed for eight straight sessions to Monday.

U.S. West Texas Intermediate crude fell $1.94, or 4.12 percent, to settle at $45.13 a barrel.

"It's a transition from being overbought for a while," said Tyche Capital Advisors senior research analyst John Macaluso.

"I really don't think it's too much fundamentals driving the move today - seems more like a reversal of the trend. Eventually someone comes out of the market and everyone follows and you have to take profits."

Prices pared losses in post-settlement trade after data from industry group the American Petroleum Institute showed U.S. crude inventories fell 5.8 million barrels in the week to June 30 to 503.7 million barrels, exceeding forecasts for a draw of 2.3 million barrels. The API data, normally released Tuesday, was delayed by the U.S. Fourth of July holiday.

Official data from the U.S. Department of Energy is due on Wednesday at 11:00 a.m. EDT, also delayed a day.

Oil traders hope vacationing motorists heading for the beach in July will help U.S. gasoline demand heat up along with sweltering summer temperatures, helping drain crude inventories.

Oil exports by the Organization of the Petroleum Exporting Countries climbed for a second month in June, Thomson Reuters Oil Research data showed.

OPEC exported 25.92 million barrels per day (bpd) in June, up 450,000 bpd from May and 1.9 million bpd more than a year earlier.

The rise came despite OPEC's vow to rein in production until March 2018 and came on the heels of Reuters' monthly OPEC production survey which found output jumped to a 2017 high last month as Nigeria and Libya continued to pump more. Both OPEC members are exempt from the output cut deal.

Russia, which led other non-OPEC producers to join the deal, would oppose any proposal for deeper cuts at OPEC ministerial meeting later this month, Bloomberg reported, citing four Russian government officials.

"The air is getting thin for oil prices. The price increase just ran out of steam, which is not very surprising, given the news flow of rising OPEC supplies," said Carsten Fritsch, senior commodity analyst at Commerzbank.

Another analyst said the strong dollar provided less incentive to invest in greenback-denominated commodities such as crude oil. The dollar pared some early gains but remained near a one-week high.

The head of the International Energy Agency told Reuters that rising output from key oil producers could hamper expectations that the oil market would rebalance in the second half of the year.

Saxo Bank cut its year-end Brent crude price forecast to $53 a barrel from $58. Yet traders and analysts pointed to some technical signs that could lead to a recovery.

"The longer term moving average systems need stronger moves over $51.50 in Brent and $49 to $49.50 in WTI which is where the 100-day and 200-day moving averages are," said Scott Shelton, broker at ICAP in Durham, North Carolina.

"Spending more time up here to get the shorter term moving averages to cross would also generate buying." - Reuters

This is source I found from another site, main source you can find in last paragraph

Source : http://www.thestar.com.my/business/business-news/2017/07/06/oil-slides-as-opec-exports-rise-prices-end-eight-days-of-gains/

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