Oil Halts Advance on Signs of Surging US Gasoline Stockpiles

Crude oil prices dropped below $50 per barrel after the Organization of Petroleum Exporting Countries (OPEC) took the path of least resistance in the bid to end the supply glut in oil. A Wall Street Journal survey estimates that USA crude oil inventories would have fallen by 3.5 MMbbls between May 26, 2017, and June 2, 2017.

West Texas Intermediate futures dropped more than 4 percent as stockpiles of oil in the United States surged by 3.3 million barrels in the week ended June 2, according to the Energy Information Administration.

Members of the Organization of Petroleum Exporting Countries and other producers, like Russian Federation, agreed in January to sideline the equivalent of 2 percent of global oil demand in an effort to balance a market favoring the supply side. "The issue of stability on a sustainable basis is probably beyond the capacity of an organisation that controls only 40 per cent and that is what led to the Algiers agreement a year ago and later to the historic first joint meeting of OPEC and non-OPEC members".

Opec has pledged to cut nearly 1.8-million barrels per day to help reduce global inventories.

"If this invitation for Indonesia to join OPEC brings bilateral or even multilateral benefit, we hope Indonesia can gain advantages in better opportunities for investment in the oil and gas upstream sector and a special price for crude oil from other OPEC members", Sujatmiko said.

CNN reported late last month, however, that the entire spat with Qatar was sparked by a fake news report by Russian hackers.

This shows an approximately one percent reduction from the 1,401mbpd recorded in the Q4'16, which also placed Nigeria on the eighth position out of the 13 country members of OPEC.

US light crude prices CLc1 were at $47.69 per barrel, down 50 cents.

Oil prices rallied sharply during the U.S. session on Tuesday with WTI moving back above the $48.0 p/b level with anticipation that there would be a further decline in oil inventories.

Capital Economics analysts say the acceleration in USA oil digging activities will soon peter out unless oil prices rise significantly.

Rising U.S. production is also putting pressure on oil. Official data by the EIA will be published later on Wednesday.

On May 25, OPEC and 10 non-OPEC partners including Russian Federation made a decision to roll over a 1.8 million barrels per day production cut agreement into March 2018.

"If global stocks do not start to show demonstrative signs of steady draws, OPEC may have to be more creative with its strategy", said the firm. The global Brent crude benchmark climbed as high as $50.74 on Monday in Asia before closing lower at $49.


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