Published: Wed, March 14, 2018
Economy | By

Oil prices fall as relief over falling U.S. rig count fades

Oil prices fall as relief over falling U.S. rig count fades

Oil prices stabilised early on Wednesday after posting two days of falls at the start of the week.

As crisis-stricken Venezuela is struggling with a steep decline in its oil production, India's average oil imports from the Latin American OPEC member have slumped over the last few months to their lowest level since 2012, Reuters reported on Tuesday, quoting industry and shipping sources.

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures finished lower on Monday on renewed concerns over rising U.S. production and tight OPEC supply.

Support came from a report that US crude inventories are not rising as much as expected during the spring season that is starting, implying healthy demand.

"Oil prices fell on the back of concerns that surging United States production. could push inventories in the USA higher", ANZ bank said on Tuesday.

Unlike Middle Eastern nations such as Saudi Arabia, which wants high crude prices to boost the value of its IPO of state-run Aramco, Iran expressed its concern over steadily-rising US production by stating it wants to work with the Organization of the Petroleum Exporting Countries (OPEC) to keep prices at $60 and curtail the output.

Futures in NY were little changed after surging 3.2 percent Friday.

The US has become the world's second-largest crude oil producer, ahead of top exporter Saudi Arabia. Both crude benchmarks have increased by nearly 60% since the middle of 2017.

But in a sign that an early-year rally in crude oil may have fizzled out, money managers cut their combined net long positions in the six most important futures and options contracts linked to petroleum prices by 50 million barrels in the week to March 6. The global benchmark widened to a $3.89 premium to May WTI.

The predictions and the forecasts for the oil production are looking grim at an expected 11 million barrels per day and more by the end of the year.

USA crude oil production C-OUT-T-EIA soared past 10 million barrels per day (bpd) in late 2017, overtaking output by top exporter Saudi Arabia.

Official weekly US crude oil production and inventory figures are due to be published by the Energy Information Administration (EIA) later on Wednesday. Gasoline futures in NY are down 0.2% at $1.8895 a gallon.

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