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UPDATE 2-Oil prices fall on lingering oversupply concerns

Published 27/04/2017, 04:48 pm
© Reuters.  UPDATE 2-Oil prices fall on lingering oversupply concerns
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* Fuel inventories around the world remain high

* U.S. crude output up 10 pct since mid-2016 to 9.27 mln bpd

* U.S. output to grow by 100,000 bpd each month this year - Rystad

* But expectation of extended output cuts supports market (Adds comment, updates prices)

By Henning Gloystein

SINGAPORE, April 27 (Reuters) - Oil prices dipped on Thursday, weighed down by a general sentiment of globally bloated markets, though traders said that prices seemed to have found support around current levels.

U.S. West Texas Intermediate (WTI) crude oil futures CLc1 were trading at $49.37 per barrel at 0644 GMT, down 25 cents, or 0.5 percent from their last close. WTI has lost around 8.5 percent in value from its April peak.

Brent crude futures LCOc1 , the international benchmark for oil prices, were at $51.63 per barrel, down 19 cents, or 0.37 percent. Brent is almost 9 percent below its April peak.

Traders said the falls in recent weeks were due to a realisation that global oil markets remained oversupplied, despite efforts led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia to cut output by 1.8 million barrels per day (bpd) during the first half of the year to tighten the market and prop up prices. is clear that the world has plenty of oil in stock, making OPEC's life that much harder ahead of its June production cut rollover date," said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.

While the United States reported a drop in its commercial crude oil stocks on Wednesday, albeit from near-record highs, its gasoline inventories surged as refiners produced more fuel than the market could consume. U.S. crude oil production C-OUT-T-EIA continued its relentless rise, and is now up 10 percent since mid-2016 at 9.27 million bpd, at comparable levels to the peak oil glut between late 2014 and early 2016.

Rystad Energy expects U.S. shale oil output to grow by 100,000 barrels per day (bpd) each month for the rest of this year and into 2018 if oil prices hold around $50-$55 a barrel, well above estimates by the U.S. Energy Information Administration for monthly gains of about 29,000 bpd in 2017 and 57,000 bpd in 2018.

"We see a risk for a weaker oil price towards the end of the year ... because shale is delivering so much oil and OPEC might fight back," Jarand Rystad told Reuters. with an expectation that OPEC would lobby for an extension of the production cuts to cover all of 2017, analysts said there was support for prices around current levels.

Reuters technical commodities analyst Wang Tao said that "Brent oil looks neutral in a range of $51.30-$52.32 per barrel." Murky oil inventory picture leaves market grappling for clarity

COLUMN: OPEC heads for failure as crude shipments overwhelm cut rhetoric

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