wnol.info May 24 2018

Here's Why Oil Prices Dipped to almost $50 Today

May 24 2018, 01:19 | Alonzo Simpson

Here's Why Oil Prices Dipped to almost $50 Today

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Crude oil prices slipped 1 percent on Monday in subdued trading after a long Easter holiday weekend, on news of rising US shale production and profit-taking following three straight weeks of gains.

Oil prices have remained largely unchanged as rising USA production continues to offset OPEC's output cut initiative.

The U.S. West Texas Intermediate crude May contract dipped 9 cents, or about 0.2%, to $52.31 a barrel by 10:35AM ET (14:35GMT).

"The glaring rise in USA gasoline refined product inventories, in combination with persistent lower-48 production growth, keeps us cautious on oil prices", said Chris Kettenmann, chief energy strategist at Macro Risk Advisors LLC in NY.

Baker Hughes BHI, +0.27% data Thursday showed that the USA oil rig count rose for the 13th straight week in the week of April 13.

Commercial crude oil inventories in the States on the other hand also fell, shrinking by 1.0m barrels to reach 532.3m barrels.

Inventories have been heading back down in the US and dropped by 1 million barrels in the latest week, the Energy Information Administration said Wednesday, a smaller drop than expected.

The compliance rate with the agreement among OPEC members and some non-members, including Russian Federation, "has been impressive", the International Energy Agency (IEA) said in its monthly oil market report, giving a lift to oil prices.

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OPEC leader Saudi Arabia tightened February crude oil exports to the lowest since mid-2015, official data showed.

US production trends come as members of the Organization and Petroleum Exporting Countries gear up for May meetings to consider extending a production deal meant to bring the energy market back to balance.

Analysts said buying was suppressed by data Thursday that showed the USA oil rig count rose for the 13th straight week (http://www.marketwatch.com/story/baker-hughes-data-show-us-oil-rig-count-up-a-13th-week-in-a-row-2017-04-13) in the week of April 13.

OPEC and top nonmember producers reportedly will meet May 25 as they remain publicly undecided over whether to extend production cuts.

Oil investors are also banking on China to prop up global demand. Saudi Arabia, boasting the world's second largest oil reserves, is now leading world's oil exports and is one of the most influential OPEC member.

On the demand front, OPEC expects the world to need about 96.32 million barrels daily, a growth rate of 1.27 million bpd. That means they're soaking up more of the oil that has built up in storage tanks, but it could point to more and more gasoline going into storage, Mr. Yawger said.

May natural gas lost 4.6 cents, or 1.4%, to $3.181 per million British thermal units. Diesel futures fell 0.69 cent, or 0.43%, to $1.6150 a gallon.

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