Crude Oil Prices Down After API Data

The OPEC scribe, however, explained that the shut-in of about 1.8 million barrels of crude oil per day within a period of six months by the 13 OPEC and 11 non-OPEC members paid off considering the rise in crude oil prices. Yet, with OPEC compliance at a reported 90% and above, and with oil prices range bound at $51-57, US oil output should rebound this year.

Barkindo stated that the crisis in the oil sector was the worst ever in recent memory, adding that the industry globally lost about $1tn during the period of the oil price fall. If confirmed by the U.S. Energy Information Administration, that could indicate supply strains are building, though storage data may be skewed as U.S. refineries start shifting operations to make a summer blend of gasoline. Some analysts see a looming “tug of war” between OPEC and the U.S. In addition, United States of America oil rig count increased for the sixth straight week to the highest level in more than fourteen months. There is also the growing prospect of cuts being extended into the second half of the year, because of the counter-pressure that US shale producers are applying to prices, which have curbed the upward potential of prices. The first cut in eight years is meant to boost prices and get rid of a supply glut. He was quoted as saying, “As far as oil prices and oil, I have left that behind”.

The OPEC Secretary also disclosed that Nigeria will continue to be exempted from the production cuts due to the challenges in the Niger Delta which has affected production.

Overall exports began to grow as the shale oil surge started in the USA, but that was nearly entirely due to refined products.

Brazil and Canada are two other nations that are expected to compensate for any decline in production that comes from OPEC. “It’s good for oil investments”, said a Gulf oil industry source familiar with the issue, as quoted by Reuters. If or when oil prices rise, Brazil’s massive offshore reserves will become increasingly attractive. In fact, state-owned Petrobras was reported a year ago as being the most heavily indebted company in all of the emerging markets.

However, a surge in U.S. crude imports since the start of this year has pushed U.S. stocks to near record highs, highlighting the challenge OPEC faces in accelerating the reduction in global inventories. Crude stockpiles hit 518.6 million barrels in the week ended February 17, according to the EIA. Oil prices lost their momentum after the American Petroleum Institute reported a build in USA oil inventories following a small draw last week. However, this news was offset by worries over rising USA production. Production from the world’s largest consumer rose above 9 MMbpd to the highest since April, the government reported last week.