Published: Thu, April 27, 2017
Business | By Jorge Reeves

U.S. crude oil stocks drop

Oil futures fell during the trading session, touching their lowest in 11 days as the US government reported that shale oil output in May was expected to post the biggest monthly increase in more than two years.

Gasoline inventories rose 1.54 million barrels last week, surprising analysts surveyed by Bloomberg who projected the Energy Information Administration data would show a 2-million-barrel decline.

West Texas Intermediate for May delivery fell as much as 55 cents to $52.63 a barrel on the New York Mercantile Exchange, before trading at $52.71 a barrel at 12:47 Dubai.

Traders opined that oil prices gained support as OPEC's secretary general assured that the oil cartel is committed to rebalance market stability by bringing down crude stocks down across the globe to the industry's five-year average.

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While compliance has been strong among Opec countries, production cuts have lagged among others that have agreed to act to curb oil prices, including Russian Federation.

The report also showed that gasoline inventories increased by 1.5 million barrels, compared to expectations for a drop 1.9 million barrels.

The surprise build in gasoline, along with an increase in U.S. production and imports from OPEC nations, pressured prices.

Prices rallied by 15 per cent since November 30, 2016 when Opec's 13 members led by the group's largest producer Saudi Arabia, agreed to curb output by more than one million barrels a day. While the OPEC and other countries remain compliant with the deal, the production in the United States has increased by more than half a million barrels per day.

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After strong gains overnight, the price for Brent crude oil, the global benchmark, was down 0.1 percent to $52.88 per barrel. "Production is up nine straight weeks here to the highest level since August 2015". The global benchmark crude ended the session at a $2.08 premium to June WTI.

Looking ahead for oil, "the next big market mover looks to be when OPEC meets regarding an extension in production cuts on May 25", said Macaluso.

Oil prices regained some ground on Thursday after steep losses the previous day, as Kuwait said it expected an OPEC-led effort to cut supplies would be extended beyond the middle of the year.

Iran pumped just shy of its 3.8 million barrels a day allowed under the deal in the first quarter, according to the International Energy Agency.

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