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US Crude Sinks Under $48 on Higher Saudi Output

March 14, 2017 at 17:08 by Andrew Moran

Oil prices are slumping on Tuesday as new data suggested that Saudi Arabia and the US had higher crude output. With the international oil markets experiencing a supply glut, US crude tumbled to under $48, which is the lowest level since late November.

April West Texas Intermediate (WTI) crude futures slipped $1.00, or 2.07%, to $47.40 per barrel at 16:41 GMT on Tuesday on the New York Mercantile Exchange. US crude prices are trading at their lowest levels in nearly four months.

Brent, the international benchmark for oil prices, is also falling. May Brent crude futures dipped $0.81, or 1.58%, to $50.54 a barrel, which is also a level unseen since the end of November, on London’s ICE Futures exchange.

Year-to-date, US crude is down more than 15% and Brent crude is down just under 13%.

A new monthly report from the Organization of Petroleum Exporting Countries (OPEC) discovered an increase in global crude stockpiles. Oil stocks in industrialized countries climbed to a total of 278 million barrels above the five-year average. This is due to rising supplies from US shale and non-OPEC producers as they attempt to take advantage of higher oil prices.

OPEC officials also found that Saudi Arabia, the world’s largest oil exporter, experienced a surprise spike oil production of 10.011 million barrels per day (bpd). This surprised many analysts because other OPEC members reached full compliance earlier this month.

It remains unclear if Saudi Arabia or other OPEC members are ready to extend the production freeze. Kuwait will host a meeting of OPEC and non-OPEC ministers on March 26 to discuss compliance with the output cuts. OPEC will host another official meeting in Vienna in May.

Meanwhile, the American Petroleum Institute (API)‘s weekly report, which is due to be released on Tuesday afternoon, will show another jump in US inventories. Last week, the API and the US Energy Information Administration (EIA) reported a bigger-than-expected increase to US inventories. The International Energy Agency (IEA)‘s monthly oil report is scheduled to be published on Wednesday.

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