Crude Prices Steady as Ample Supply Meets Firm Demand

Crude Prices Steady as Ample Supply Meets Firm Demand
Crude Prices Steady as Ample Supply Meets Firm Demand

Oil markets steadied on Tuesday, supported by firm demand but weighed down by high supplies from OPEC and producers in the United States.

Benchmark Brent crude was up 20 cents at $48.62 a barrel. US light crude oil was 15 cents higher at $46.17, CNBC reported.

"We're stuck in a range that, I think, will be tough to break out of without some kind of political factor coming into play," said Matt Stanley, fuel broker at Freight Investor Services.

In a sign of strong demand, data on Monday showed refineries in China increased crude throughput in June to the second highest on record.

But many markets are well supplied and oil for prompt delivery is trading at heavy discounts to forward futures in several parts of the world. As a result, crude oil prices are trading at only around half the levels seen three years ago.

A deal by the Organization of Petroleum Exporting Countries with Russia and other non-OPEC producers to cut supplies by around 1.8 million barrels per day between January this year and March 2018 has so far failed to tighten the market or push up prices.

Although many OPEC countries have restricted production, others including Nigeria and Libya have been allowed to increase output. Ecuador, a small producer within OPEC, said on Tuesday it was not cutting its production by 26,000 bpd as agreed due to the country's fiscal deficit, which is expected to hit 7.5% of gross domestic product this year.

Oil minister, Carlos Perez, said Ecuador was cutting only 60% of that figure, putting current output at 545,000 bpd.

"We are not meeting the quota imposed on us because of the obvious needs the country has," Perez said.

US oil production is also rising steadily, helping soak up much of the market share vacated by OPEC members.

The US Energy Department said in a report on Monday that US shale oil output is likely to rise for the eighth consecutive month in August, climbing 112,000 bpd to 5.585 million bpd.

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