Crude oil edges down on expected climb in USA output

While OPEC countries still made up most (57%) of China's 7.6 million barrels per day (b/d) of crude oil imports in 2016, crude oil from non-OPEC countries made up 65% of the growth in China's imports between 2012 and 2016.

The official pointed to discrepancies between government data on oil output and figures compiled by OPEC's "secondary sources", and denied reports that Iran is pumping above the agreed levels.

According to OPEC, its members pumped a combined 31.93 million barrels daily last month, down by 153,000 bpd from February.

The Managing Director of Shell Petroleum Development Company (SPDC), Osagie Okunbor, had said the company was working to remove a significant number of oil theft connections and effect repairs on the pipeline.

In addition, the possible Opec deal extension to extend the production output cut to beyond June 2017 would likely give support to oil prices. What he has overlooked is the fact that historically high oil prices drove experimentation so that the risk of long-tail market consequences could, by man's own ingenuity, be pushed out further into our civilisation's future. Investment inflows should increase in the second quarter, the bank predicted. Goldman's long-term WTI price of $50 per barrel remains slightly lower than its 5-year estimate of $54 per barrel, however, the bank said it anticipates a positive outlook going forward - one not seen for nearly 15 years. This would vastly outweigh the 1.8m b/d that was agreed upon previous year in an arranged output restriction.

The International Energy Agency (IEA) has released a statement that they believe the oil market is soon approaching equilibrium, mostly due to the success of the OPEC production deal.

At the same time, Citi experts warn that a failure to extend the output agreement may "precipitously" lower prices for crude, as increased supplied in late 2016 is still "a dark cloud hanging over the market". "On balance, market sentiment will continue to be swayed by the weekly US stocks data", she said.

Even at this mid-way point, we can consider what comes next. The North Sea contract was also down 1% earlier in the session.

The bank expects USA liquids output to grow year-over-year at 1 million barrels per day or more by December. The new data shows weaker-than-expected growth in a number of countries including Russia, India, several Middle Eastern countries, Korea and the USA, where demand has stalled in recent months. Iraq, which is reportedly above its production target, has dropped its exports by 13 percent from the first month of 2017. By July 2014, the world was virtually awash in oil - storage tanks were full and supertankers were languishing in ports with no market for their cargos. And this should also carry a considerable positive impact on the proposed Aramco IPO.

  • Todd Kelly