Oil steady but record US stocks weigh on sentiment
Brent is hardly changed at $55.73 amid support from Opec’s supply cuts, but pressure comes from rising inventories and crude production in the US
Singapore — Oil prices held steady on Thursday, supported by supply cuts led by producer group Opec, although rising fuel inventories and crude production in the US weighed on sentiment.
Brent crude futures were trading at $55.73 a barrel at 2.09am GMT, down just 2c from their last close. US West Texas Intermediate (WTI) crude futures, were down 4c at $53.07 per barrel.
Opec and other producers including Russia have agreed to cut output by almost 1.8-million barrels a day during the first half of 2017, and estimates suggest compliance by Opec is around 90%. The production cuts are aimed at reining in a global fuel supply overhang that has dogged markets for more than two years.
Yet despite action so far, inventories remain bloated and supplies high, especially in the US. US crude oil and petrol inventories soared to record highs last week as refineries cut output and petrol demand softened, the Energy Information Administration (EIA) said on Wednesday.
Crude inventories rose 9.5-million barrels in the week ended February 10, nearly three times more than analysts’ expectations, boosting commercial stocks to a record high at 518-million barrels.
Petrol stocks rose 2.8-million barrels, compared with analysts’ expectations in a Reuters poll for a 752,000-barrel drop. That pushed inventories of the fuel to a record at 259-million barrels.
The bloated stocks come as US crude oil production has risen 6.5% since mid-2016 to 8.98-million barrels a day.
Because of the conflicting price drivers of Opec’s cuts and rising US inventories and production, analysts said that prices were largely moving sideways.
"Brent oil looks neutral in a range of $55.38-$56.44 a barrel," said Reuters technical commodities analyst Wang Tao.
Both Brent and WTI crude futures have traded within a $5 a barrel price range since the start of the year.