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Crude oil prices fall as major producers hint at output hike

Published 21/04/2016, 11:04 am
© Reuters. Crude oil prices fall as major producers hint at output hike
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* IEA says market won't re-balance before 2017

* Russia says it could lift output to over 12 mln bpd

* Iran re-iterates plans to regain post-sanctions market share

* Analysts say rebalancing will largely depend on U.S. output

By Henning Gloystein

SINGAPORE, April 21 (Reuters) - Crude prices fell early on Thursday as concerns over a global glut took centre stage after Russia and Iran said they were ready to raise oil production further, while inventories in the United States climbed slightly.

The International Energy Agency (IEA) said on Thursday that oil markets would likely take until 2017 to rebalance and that even that was provided there was no major economic slowdown. Brent crude futures LCOc1 were trading at $45.36 per barrel at 0048 GMT, down 44 cents from their last settlement.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were down 40 cents at $43.78 a barrel after the U.S. Energy Information Administration (EIA) said that crude stocks rose slightly, by 2.1 million barrels last week. said on Wednesday it was prepared to push oil production to historic highs, just days after a global deal to freeze output levels collapsed and Saudi Arabia threatened to flood markets with more crude.

Energy Minister Alexander Novak said Russia was "in theory" able to raise production to 12 million or even 13 million barrels per day (bpd) from current record levels of close to 11 million bpd. Iran, determined to regain market share following the lifting of international sanctions last January, reiterated its intention to reach output of 4 million bpd as soon as possible. major producers in the Middle East and Russia seemingly racing to raise production, much will depend on U.S. shale drillers and demand to determine how long the global glut lasts which sees between 1 million and 2 million barrels of crude pumped every day in excess of demand.

"Any hope of market re-balancing from the current surplus in supply (lies) on the predicted decline in U.S. oil production," French bank BNP Paribas (PA:BNPP) said.

IEA chief Fatih Birol said on Thursday he expected the oil market to come back into balance from oversupply by next year, although he warned that this was provided there were no major economic shocks.

Speaking in Japan, Birol said the IEA expects non-OPEC oil production to fall by about 700,000 bpd this year.

"The U.S. accounts for the bulk of non-OPEC's 2016 oil supply contraction of 700,000 barrels per day forecast. If the decline in the U.S. oil supply proves insufficient to tighten balances, then ... the oil price will remain low to further crowd out higher cost and less efficient producers, as well as stimulate demand," BNP Paribas said.

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