February 23 2016
Category: Commodities
Crude oil dipped in Asia on Tuesday ahead of industry estimates of U.S. stockpiles later in the day.The American Petroleum Institute will release estimates of crude and refined product stockpiles in the U.S. last week later Tuesday. On Wednesday, more closely-watched figures from the U.S. Department of Energy are due.On the New York Mercantile Exchange, WTI crude for April delivery fell 0.36% to $33.27 a barrel.Overnight, crude futures pared some gains after soaring as much as 6% on Monday, as the International Energy Agency estimated sharp declines in U.S. production through 2017 in its latest forecast.On the Intercontinental Exchange, Brent crude for April delivery traded between $32.84 and $34.97 a barrel, before closing at $34.74, up 1.73 or 5.24% on the session. With the sharp gains, brent futures halted a three-day losing streak. After dipping below $30 a barrel in mid-February, North Brent Sea futures have rallied more than 13%.Meanwhile, the spread between the international and U.S. domestic benchmarks of crude stood at $1.35, slightly above Friday's level of $1.28 at the close.Investors on Monday reacted to a bullish report from the Paris-based International Energy Agency (IEA), which predicted that U.S. crude production will continue to slide as prices hover near record-lows.In its 2016 Medium-Term Oil Market Report, the IEA said that U.S. light, thick oil (LTO) will fall 600,000 barrels per day this year, before declining by another 200,000 bpd in 2017, when at which point the markets will start rebalancing. By 2021, however, the IEA expects the U.S. to lead the world in production increases when it anticipates that total U.S. liquid production will rise by 1.3 million bpd in comparison with its 2015 level.Domestic crude production in the U.S. fell sharply by 51,000 barrels per day to 9.135 million bpd for the week ending on Feb. 12, representing its fourth consecutive week of weekly declines. It also marked the second straight week that output fell below the 9.2 million bpd threshold. Last June, U.S. weekly production surged above 9.5 bpd to reach its highest level in more than 40 years."Anybody who believes that we have seen the last of rising LTO production in the United States should think again," the IEA said in the report. "Such has been the element of surprise provided by the resilience of US oil production, and the wide divergence of views as to the future, that we have added a High and Low Case to our non-OPEC production analysis and plotted the impact on the global oil market balance of US LTO production falling by more than in our base case or, conversely, less."Investors also await an appearance by Saudi Arabia oil minister Ali Al-Naimi on Tuesday in Houston for further indications on whether OPEC could strike its first deal with non-OPEC producers in 15 years. Last week, Saudi Arabia and three other OPEC members reached a deal with Russia in principle to freeze their production at January levels. The deal requires the support of Iran, which is in favor of production freezes by its rivals, but has been hesitant to limit their own output until it returns to pre-sanction levels from 2007.Crude prices have crashed by more than 60% over the last 15 months since OPEC rattled global markets with a strategic decision to leave its production ceiling above 30 million bpd at a meeting in November, 2014. The tactic triggered a prolonged battle between Saudi Arabia and U.S. shale producers for market share, saturating global energy markets with a glut of oversupply.
Category: Commodities
Crude oil dipped in Asia on Tuesday ahead of industry estimates of U.S. stockpiles later in the day.The American Petroleum Institute will release estimates of crude and refined product stockpiles in the U.S. last week later Tuesday. On Wednesday, more closely-watched figures from the U.S. Department of Energy are due.On the New York Mercantile Exchange, WTI crude for April delivery fell 0.36% to $33.27 a barrel.Overnight, crude futures pared some gains after soaring as much as 6% on Monday, as the International Energy Agency estimated sharp declines in U.S. production through 2017 in its latest forecast.On the Intercontinental Exchange, Brent crude for April delivery traded between $32.84 and $34.97 a barrel, before closing at $34.74, up 1.73 or 5.24% on the session. With the sharp gains, brent futures halted a three-day losing streak. After dipping below $30 a barrel in mid-February, North Brent Sea futures have rallied more than 13%.Meanwhile, the spread between the international and U.S. domestic benchmarks of crude stood at $1.35, slightly above Friday's level of $1.28 at the close.Investors on Monday reacted to a bullish report from the Paris-based International Energy Agency (IEA), which predicted that U.S. crude production will continue to slide as prices hover near record-lows.In its 2016 Medium-Term Oil Market Report, the IEA said that U.S. light, thick oil (LTO) will fall 600,000 barrels per day this year, before declining by another 200,000 bpd in 2017, when at which point the markets will start rebalancing. By 2021, however, the IEA expects the U.S. to lead the world in production increases when it anticipates that total U.S. liquid production will rise by 1.3 million bpd in comparison with its 2015 level.Domestic crude production in the U.S. fell sharply by 51,000 barrels per day to 9.135 million bpd for the week ending on Feb. 12, representing its fourth consecutive week of weekly declines. It also marked the second straight week that output fell below the 9.2 million bpd threshold. Last June, U.S. weekly production surged above 9.5 bpd to reach its highest level in more than 40 years."Anybody who believes that we have seen the last of rising LTO production in the United States should think again," the IEA said in the report. "Such has been the element of surprise provided by the resilience of US oil production, and the wide divergence of views as to the future, that we have added a High and Low Case to our non-OPEC production analysis and plotted the impact on the global oil market balance of US LTO production falling by more than in our base case or, conversely, less."Investors also await an appearance by Saudi Arabia oil minister Ali Al-Naimi on Tuesday in Houston for further indications on whether OPEC could strike its first deal with non-OPEC producers in 15 years. Last week, Saudi Arabia and three other OPEC members reached a deal with Russia in principle to freeze their production at January levels. The deal requires the support of Iran, which is in favor of production freezes by its rivals, but has been hesitant to limit their own output until it returns to pre-sanction levels from 2007.Crude prices have crashed by more than 60% over the last 15 months since OPEC rattled global markets with a strategic decision to leave its production ceiling above 30 million bpd at a meeting in November, 2014. The tactic triggered a prolonged battle between Saudi Arabia and U.S. shale producers for market share, saturating global energy markets with a glut of oversupply.
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