Cyber Monday Deal: Up to 60% off InvestingProCLAIM SALE

Crude futures edge up, but U.S. inventory build drags

Published 05/11/2015, 06:43
© Reuters. A pump jack operates at a well site leased by Devon Energy Production Company near Guthrie, Oklahoma
LCO
-
CL
-

TOKYO (Reuters) - Oil futures were up slightly in early Asian trade on Thursday after losses the previous session on official figures showing a sixth consecutive week of inventory gains in U.S. crude stockpiles.

Crude prices slumped as much as 4 percent on Thursday after the Energy Information Administration said U.S. crude inventories added 2.85 million barrels last week, in line with forecasts, despite a drop in imports to the lowest level since 1991.

U.S. crude was up 5 cents at $46.38 a barrel by 0621 GMT. The contract fell $1.58, or 3.3 percent, to $46.32 on Wednesday.

Brent crude rose 11 cents to $48.69 a barrel, after dropping 3.9 percent on Wednesday.

"The U.S. data was a negative and there is not much chance of further improvement at this stage in the demand/supply balance, with inventories heading up and production basically steady," said Ric Spooner, chief market analyst at CMC Markets in Sydney.

Contributing to the general bearish sentiment was an internal OPEC document published by Reuters that showed weaker demand in the next few years for oil from the producer group.

OPEC oil ministers are due to meet on Dec. 4 to decide whether to extend the strategy of allowing prices to fall to slow higher-cost rival supply.

Since November 2014, when the group adopted that policy, OPEC production has risen but prices have deepened their collapse, hurting oil revenue, with Saudi Arabia, the biggest producer, pumping near record levels to protect market share.

OPEC, along with Russia, is unlikely to change the strategy, BMI Research said in a note on Thursday.

"Our view remains that OPEC and Russia will continue on their strategy of producing as much oil as possible to squeeze out higher cost producers," BMI said.

© Reuters. A pump jack operates at a well site leased by Devon Energy Production Company near Guthrie, Oklahoma

"With oil production of major producers strong, falling output from U.S. shale will be insufficient to balance the oversupplied oil market over the next two years," it said.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.