Published: Tue, April 25, 2017
Business | By Patricia Jimenez

Oil markets remain cautious on record supplies

Russia's Energy Minister Alexander Novak, however, declined to say whether the top non-OPEC oil producer would adhere to an extension, saying global stocks were declining.

US West Texas Intermediate (WTI) crude futures were also nearly unchanged, at $50.74 a barrel.

Those comments came as the price per barrel of oil stands just above $50 (46.5 euros) despite a deal between OPEC and non-OPEC countries last November aimed at cutting production by 1.8 million barrels a day.

Brent crude futures LCOc1 rose 38 cents by 1148 GMT to $52.34 (40.84 pounds) per barrel.

"The situation has gradually been improving since the beginning of March", he noted further.

USA crude for June delivery recently traded down $1.07, or 2.1%, to $49.64 a barrel on the New York Mercantile Exchange, a three-week low. Prices dropped by more than 3.8% on Wednesday after data showed USA crude production rose for a ninth straight week, even as stockpiles continued to decline from a record.

Russian Federation has cut 250,000 bpd of its crude oil output, with another 50,000 bpd to go as per its agreement with OPEC, Energy Minister Alexander Novak told media today, adding that the other 50,000 bpd will be cut by the end of the month. Brent futures are set for a 5.2 percent weekly drop, the most since the week of March 10.

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On Wednesday, crude prices tumbled more than 3.5 percent as US government data showed domestic crude stocks fell less than expected in the latest week and gasoline stocks posted a surprising 1.5-million-barrel build.

The market is taking note: The value of the entire Brent forward curve has slumped steadily since the start of the OPEC-led cuts in January. The report from the U.S. Energy Information Administration also showed slight production increases in the U.S. That reinforced widespread anxiety that U.S. shale producers are becoming more capable of increasing output even with prices half of what they were three years ago.

The high supplies are in part a result of other producers, who haven't agreed to cut output, increasing exports.

"The resurgence of U.S shale continues to sabotage. efforts to stabilise the saturated markets", said Lukman Otunuga of futures brokerage FXTM.

"The perception that US shale oil producers will replace OPEC cuts and concerns about the direction of the global economy after a terror attack in France ahead of Sunday's French election, is causing many traders to keep their powder dry". However if prices remain supported above $50.27, traders may look for crude oil prices to bounce back towards points of daily resistance.

USA crude production is at 9.25 million bpd, up nearly 10 percent since mid-2016 and approaching that of OPEC's top exporter Saudi Arabia.

Saudi Arabia Energy Minister Kalid al-Falih said Thursday that a handful of OPEC members have reached a tentative agreement to cut more supply.

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