Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Oil hovers near 6-mth high as U.S. stockpile build counters supply fears

Published 2019-04-24, 03:35 p/m
Updated 2019-04-24, 03:35 p/m
© Reuters.  Oil hovers near 6-mth high as U.S. stockpile build counters supply fears

© Reuters. Oil hovers near 6-mth high as U.S. stockpile build counters supply fears

* U.S. crude stocks rise more than expected to Oct 2017 highs -EIA

* U.S. Iran sanctions buoyed prices this week

* Saudi May output similar to prior months, June not set yet

By Stephanie Kelly

NEW YORK, April 24 (Reuters) - Oil prices hovered near six-month highs on Wednesday after data showed U.S. crude stockpiles surged to their highest levels since October 2017, countering fears of tight supply resulting from OPEC output cuts and U.S. sanctions on Venezuela and Iran.

Brent crude futures LCOc1 rose 6 cents to settle at $74.57 a barrel. The international benchmark reached $74.73 a barrel on Tuesday and Wednesday, highest since Nov. 1.

U.S. West Texas Intermediate crude futures CLc1 were under more pressure from the build in domestic stocks, and ended 41 cents lower at $65.89 a barrel. On Tuesday, WTI hit $66.60, the highest since Oct. 31.

U.S. crude inventories USOILC=ECI rose 5.5 million barrels last week, the Energy Information Administration said, far more than analysts' forecast of an increase of 1.3 million barrels. EIA/S

Crude output in the United States, which turned into the world's top producer last year, last week edged back to its record high at 12.2 million barrels per day while net imports jumped 900,000 bpd, EIA data showed.

However, refinery utilization rates USOIRU=ECI rose to 90.1 percent of total capacity, their highest since early February.

The build in crude stockpiles was "bearish, especially developing in spite of a larger-than-expected jump in U.S. refinery runs of almost 2.5 percent of capacity," Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

Crude futures and prices for spot delivery rallied after the United States said on Monday it would end all exemptions for sanctions against Iran, demanding countries halt oil imports from Tehran from May or face punitive action. The move raised worries about tighter global oil supplies. United States must be prepared for consequences if it tries to stop Iran from selling oil and using the Strait of Hormuz, Iran's foreign minister, Mohammad Javad Zarif, warned on Wednesday. Iran's biggest oil customer, has formally complained about the move. spot price surge put the Brent forward curve into steep backwardation, in which prices for later delivery are cheaper than for prompt dispatch.

The United States has said it saw Saudi Arabia as a partner to balance oil markets.

Signaling no immediate action to counteract missing Iranian barrels, Saudi Energy Minister Khalid al-Falih said on Wednesday that his country's production in May would not vary greatly from previous months. added that Saudi Arabia aimed to stick to its output quota fixed in a deal by the Organization of the Petroleum Exporting Countries, Russia and others, known as OPEC+, but that June numbers would be determined depending on customers' needs. Arabia has created 500,000 bpd of "swing capacity" within its OPEC+ agreement allocation, running at 9.8 million bpd versus 10.3 million bpd cap, Paul Sankey, an energy analyst at Mizuho, wrote in a note.

"If the market starts to appear too tight with a reduction in Iranian exports, Saudi has some capacity to ease the impact without breaking its OPEC+ pledge and endangering OPEC+ group commitment."

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ GRAPHIC-Oil price curve in backwardation png

https://tmsnrt.rs/2DvAqxz GRAPHIC-U.S. crude oil production & exports

https://tmsnrt.rs/2ULQiTd

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.