Tuesday, November 5, 2024

Brent Slips Below $64 as Ample Supplies Weigh

Posted by April 17, 2015

Oil prices eased slightly on Friday as evidence this week of rising crude supplies from OPEC members offset Middle East tensions and signs of a slowdown in U.S. output.

Brent crude was still within sight of its 2015 high reached on Thursday and has rallied 16 percent in April, supported by conflict in Yemen and the prospect that lower prices are starting to curb U.S. shale output.

At 1302 GMT, Brent crude for June slipped 12 cents to $63.86 a barrel. It hit a 2015 high of $64.95 on Thursday. U.S. crude for May was down 52 cents at $56.19 a barrel.

Pressuring prices on Thursday, the Organization of the Petroleum Exporting Countries (OPEC) said in its monthly report that its March production jumped 810,000 barrels per day (bpd) to 30.79 million bpd, led by Saudi Arabia.

A day earlier, the International Energy Agency, which advises industrialised countries, also reported a surge in OPEC production to 31 million bpd, which it said could delay a tightening in the global market.

"There is the prospect in the second quarter of an enormous 2.4 to 2.7 million bpd stockbuild if OPEC production continues at 31 million bpd," said David Hufton of brokers PVM.

"Could it be that Saudi Arabia wants to frighten non-OPEC producers such as Russia to the production negotiation table?"

Talks between OPEC and other major producers triggered speculation about deals to cut production and supported oil prices on Wednesday, though most analysts said an agreement was unlikely.

Conflict in Yemen provided a floor for prices. Military units protecting Yemen's Masila oilfields, the country's largest, withdrew on Friday and handed over security responsibilities to armed local tribes, in a sign of the weakening grip of the Yemeni state over its land and resources.

While Yemen is not a major oil producer, the conflict raises concern about risks to supply from major exporters in the region such as its neighbour Saudi Arabia.

Crude also got a lift from signs this week the price drop is starting to slow U.S. production and from a smaller-than-expected rise in U.S. crude inventories that raised hopes months of rising stocks may be nearing an end.

Oil prices have almost halved since June 2014 on ample supplies. The drop deepened after OPEC refused in November to cut its production and instead chose to defend market share against higher-cost producers such as the United States.

By Himanshu Ojha, Additional reporting by Alex Lawler in London and Henning Gloystein in Singapore

Related News