Oil prices fall on surging US crude supply, economic slowdown

Mae Love
April 14, 2019

The oil market also followed global stock markets higher after positive corporate earnings results from JP Morgan.

In February, the oil reserves of the OECD countries remained at 16 million barrels above the five-year average.

"Equities are getting off to a good start with earnings season and the dollar index being weaker helps reaffirm confidence in the oil market", said Phil Streible, senior commodities strategist at RJO Futures in Chicago.

Global benchmark Brent crude jumped over 1 percent to $71.56 per barrel while U.S. West Texas Intermediate (WTI) crude futures were up as much as 1.4 percent at $64.45 per barrel. Demand is expected to grow by 1.4 percent per day.

Oil markets have been pushed up by more than a third this year by supply cuts led by the OPEC, US sanctions on oil exporters Iran and Venezuela, and escalating fighting in Libya.

The Canadian Central Bank said that the rising prices are fed by geopolitical factors and could bring prices to $80 per barrel or more. It's not until the WTI Crude Oil market breaks out to the upside that this market will be able to go higher as well.

The oil cartel and its allies will meet in June to decide whether to continue withholding supply.

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A fourth OPEC source said there were talks about ideas such as whether OPEC should continue with the cuts alone, a deal extension of only three months to keep Russian Federation on board or pumping more if prices rise further.

The producer group's supply cuts have been aimed largely at offsetting record crude production out of the United States.

US oil giant Chevron Corporation said on Friday it will buy Anadarko Petroleum Corporation in a stock and cash transaction valued at 33 billion USA dollars to bolster its position in shale and the liquid natural gas market.

In 2018 OPEC+ chose to increase output at its mid-year meeting, only to return to production cuts in 2019.

On the demand side, Chinese data showed exports rebounded last month, driving USA and euro zone bond yields to three-week highs and helping offset weaker imports and reports of another cut in German growth forecasts. Yet it also said an accumulation of economic risks from Europe to Argentina may ultimately lead the agency to reduce its outlook for demand.

US crude inventories rose seven million barrels to 456.6 million barrels in the last week, their highest since November 2017, the Energy Information Administration said on Wednesday.

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