Brent Slips on Rising US Inventories, Shale Output

Brent Slips on Rising US Inventories, Shale Output

Oil prices fell on Wednesday after builds in US inventories reinforced expectations that increasing shale output this year would reduce the impact of production cuts by OPEC and other major exporters.
Benchmark Brent crude was down 1% or 54 cents a barrel at $54.90. US light crude was down 52 cents at $52.66, Reuters reported.
Weekly inventory data from the American Petroleum Institute late on Tuesday showed US crude, gasoline and diesel stocks rose more than expected last week. The US government’s Energy Information Administration reports its own data and traders will look to see whether the official figures confirm the industry’s numbers. 
“The API report was bearish,” said Tamas Varga, senior analyst at London brokerage PVM Oil Associates. “Expect more pressure on prices if the EIA shows similar numbers.”
Oil prices have found support in recent weeks from plans by the Organization of Petroleum Exporting Countries and other producers to reduce output.
Around 1.5 million barrels per day has already been taken out of the market from about 1.8 million bpd agreed by oil majors starting on Jan. 1, energy ministers said on Sunday, as producers look to reduce oversupply.
Bernstein Energy said global oil inventories declined by 24 million barrels to 5.7 billion barrels in the fourth quarter of last year from the previous quarter. The amount remaining equates to about 60 days of world oil consumption. But as OPEC is cutting, US shale output is rising. US oil production has increased by more than 6% since mid-2016, although it remains 7% below its 2015 peak. Output is back to levels reached in late 2014, when strong US crude output contributed to a crash in oil prices.
US President Donald Trump’s promise to support the US oil industry has encouraged analysts to revise up their forecasts of growth in US oil production, which is already benefiting from higher prices.

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