Mubasher TV
Contact Us Advertising   العربية

Oil shrugs off losses despite record US output, OPEC hike

Oil shrugs off losses despite record US output, OPEC hike

Mubasher: Oil prices edged higher on early Friday despite record high of US crude output and an expected supply increase supported by Organization of the Petroleum Exporting Countries (OPEC).

US Nymex futures inched higher $0.11 to $ 67.15 per barrel (pb) after plunging 2% to $66.81 pb on Thursday, while Brent crudes were little changed from their last trading session as they gained $0.16 to $77.72 pb.

On a weekly basis, Nymex dropped 1.5% adding to almost 5% decline last week, while Brent is expected to surge 1.3%, expanding the price gap between both benchmarks.

Moreover, global benchmark Brent exceeded US Nymex by $11 pb on Thursday, recording the largest difference since 2015, while it has doubled in less than a month driven by the lack of pipeline capacity in the US.

The rising prices come ahead of the Baker Hughes data pertaining drill count in the US due later in the day.

Although US crude inventories dropped by 3.6 million barrels the week ended 25 May, US production has been rising to record high since the end of last year, rising by 215,000 barrels per day (bpd) in March the highest monthly level to 10.47 million bpd, as reported by the Energy Information Administration (EIA) on Thursday.

“A drop in inventories in the US was overshadowed by US output which jumped to a record-high level,” Australia and New Zealand Bank (ANZ) said.

As US production is growing, the spread between both benchmarks increases, which would lead “to take [US Nymex] as it is so cheap,” Mitsubishi Corp oil risk manager in Tokyo Tony Nunan told Reuters.

In addition, Saudi Arabia and Russia have discussed last week to ramp up oil supply by a 1 million bpd.

OPEC and their non-OPEC allies target to maintain the oil output cut deal to the end of the year, whereas they would readily make adjustments to consolidate any supply shortage, a source familiar with the matter told Reuters.

By 7:12 am GMT, US Nymex futures rose 24% to $67.20 pb, while Brent crudes surged 27% to $77.77 pb.