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US Crude Falls As Domestic Output, Supplies Rise

March 6, 2019 at 17:04 by Andrew Moran

Crude oil futures are sliding midweek as the US government reported that domestic inventories rose more than what the market had anticipated. Crude prices are also taking a hit as record-high American output is offsetting Organization of the Petroleum Exporting Countries (OPEC)’s production cuts.

April West Texas Intermediate (WTI) crude futures tumbled $0.35, or 0.62%, to $56.21 per barrel at 15:31 GMT on Wednesday on the New York Mercantile Exchange. Oil has soared nearly 21% year-to-date, but it is on track for a weekly decline.

Brent, the international benchmark for oil prices, is trading in the opposite direction in the middle of the trading week. May Brent crude futures rose $0.14, or 0.21%, to $66.00 a barrel on London’s ICE Futures exchange. So far this year, Brent prices have also surged 21% and are poised for a weekly loss.

According to the US Energy Information Administration (EIA), domestic inventories climbed by 7.1 million barrels for the week ending March 1, which is higher than the median estimate of 1.9 million barrels. US output topped 12.1 million barrels per day (bpd). Gasoline stockpiles declined by 4.2 million barrels, while distillate supplies fell 2.4 million barrels.

The US Baker Hughes total oil rig count stood at 843, down from 853.

OPEC and non-member producers have promised to reduce output by 1.2 million bpd, and reports suggest that the cartel will reject a proposal to extend the agreement from April to June. Sources close to the situation say that oil-rich nations fear that the US will continue to take away market share, particularly if Saudi America offsets these cuts.

Last week, Saudi Arabia hinted that additional production cuts could happen in the second half of 2019 in order to boost prices.

International oil markets are also keeping a close eye on US-China trade negotiations. Reports say that Beijing and Washington are close to reaching a new trade agreement that could be signed by the end of the month. While the White House noted it would reject an imperfect trade deal, the administration said it would continue to work on a new trade pact.

In other energy commodities, April natural gas futures slipped $0.05, or 1.7%, to $2.83 per million British thermal units (btu). April gasoline futures edged up $0.005, or 0.35%, to $1.77 a gallon. April heating oil futures dipped $0.01, or 0.5%, to $2.00 per gallon.

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