Oil recoups losses, but U.S. output offsets Chinese economic growth

18 April, 2017, 01:40 | Author: Glen Fletcher
  • Oil recoups losses, but U.S. output offsets Chinese economic growth

June Brent crude on London's ICE Futures exchange fell $0.49, or 0.9%, to $55.40 a barrel.

West Texas Intermediate Crude Oil has spent the better part of the past year oscillating near the $50-a-barrel level.

USA crude oil inventories remain near record-levels, but trended lower for the third-consecutive week; declining 2.2 million barrels from the week before. North American markets closed for the Good Friday holiday. The country was exempted from the initial agreement and allowed to increase its crude output to about 4 million barrels-the production level before Western sanctions were imposed on the country.

China's economy expanded faster than expected in the first quarter as higher government infrastructure spending and a property boom helped boost industrial output by the most in more than two years. "The drop in tensions following North Korea's failed missile test. have seen oil fade in Asia", said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.

But in thin trading due to holidays across Europe, the focus was on indications that shale oil output in the United States was creeping higher. "If I were OPEC, I'd be pretty anxious".

Markets were bracing for furtther geo-political friction over North Korea, after the hermit nation's attempted testing of a ballistic missile exploded immediately after liftoff. It is of course Opec's business to decide on its output levels, but a outcome of (hypothetically) extending their output cuts beyond the six-month mark would be bigger implied stock draws.

In Libya, fighting between rival factions has cut oil output, but state oil company NOC was able to reopen at least one field and was pushing to reopen another.

Energy services firm Baker Hughes said on Thursday that drillers added 11 oil rigs in the week to April 13, bringing the total count up to 683. However, IEA noted in the absence of OPEC extending its production cuts, the second half of the year could be more volatile due to a tighter USA supply and lower global oil demand.

According to OPEC's latest Monthly Oil Market Report, Iran produced 3.79 million barrels daily last month, down slightly from the 3.82 million bpd in February but higher than the 3.78 million barrels in January.

Strong March investment, retail sales and exports all suggested China, the world's No. 2 oil consumer, may carry solid economic momentum into spring.

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