Oil prices decline as global glut concerns linger

Oil prices decline as global glut concerns linger

Oil prices decline as global glut concerns linger

USA crude oil stocks fell more than expected last week, while gasoline and distillate inventories rose more than forecasts, the Energy Information Administration said on Wednesday.

Oil is still about 20 percent above the lows reached in late December, but analysts said Brent has been trading in the low $60s and US crude in the low $50s due to ongoing nervousness about relations between Washington and Beijing and China's economic outlook.

Expectations that the United States may grant waivers on sanctions it imposed on importing Iranian oil to fewer countries could also ease concerns about oversupply.

International Brent crude oil futures were at $62.57 per barrel at 0215 GMT, down 13 cents, or 0.2 percent, from their last close.

Production in the US will rise by 1.3 million barrels a day this year, the IEA said.

The US could soon overtake Saudi Arabia in the production of crude oil which is now at peak capacity.

Brent futures prices have stabilised around $60 per barrel in recent sessions, well below the peak of over $85 at the start of October, but significantly higher than the trough of less than $50 in late December.

Most of the reduction came from Saudi Arabia (470,000 bpd), but there were also substantial cuts from Iran (160,000 bpd) and Libya (170,000 bpd) as a result of US sanctions and domestic unrest respectively.

Saudi Arabia demonstrated its resolve to lift oil prices by slashing output ahead of the entry into force of new pact limiting production while Russian Federation boosted output to a record level, the International Energy Agency said Friday.

A separate report from China's National Bureau of Statistics showed crude oil refinery throughput in 2018 climbed to a record 12.1 million barrels per day, up 6.8 percent from the previous year.

The decline in Venezuelan production has also slowed, while more growth is expected in the U.S. where liquids production increased by an "incredible and unexpected" 2.1 million barrels a day in 2018, the IEA said.

The IEA said the United States increased output by 2.1 mbd a year ago, the "highest ever" annual growth ever recorded.

Output cuts planned by the Organization of Petroleum Exporting Countries and its partners should stabilize world markets, though the process will be slow, the IEA said.

EIA expects US regular retail gasoline prices to follow changes to the cost of crude oil, dipping from an average of $2.73/gallon in 2018 to $2.47/gallon in 2019, before rising to $2.62/gallon in 2020.

"If the domestic and global forecasts are realized, crude oil production at these levels would allow the United States to maintain its status as the world's leading crude oil producer in both years", the EIA said.

America's energy industry continued to expand under President Trump heading into the New Year, with new estimates showing U.S. crude output is on track to exceed Saudi Arabia "at their peak".

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