Oil slips below $64 as ample supplies weigh

Oil storage tanks are seen at sunrise with the Rocky Mountains and the Denver downtown skyline in the background Oct 14, 2014. Reuters

Oil storage tanks are seen at sunrise with the Rocky Mountains and the Denver downtown skyline in the background Oct 14, 2014.

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 US shale output.

At 5 a.m EDT, Brent crude for June LCOc1 was down 75 cents at $63.23 a barrel. Brent reached a 2015 high of $64.95 on Thursday. US crude for May CLc1 was down 82 cents at $55.89 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 industrialized 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.

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.

Conflict in Yemen supported prices on Thursday. A tribal group made up of former Al Qaeda militants took control of a major southern oil terminal in the country.

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 US production and from a smaller-than-expected rise in US crude inventories that raised hopes months of rising stocks may be nearing an end.

Source: Bd news24

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