LONDON: Oil prices were broadly steady on Thursday but still set to slip over the week for the second time in a row against a backdrop of rising US crude production and an increase in inventories.
Brent crude futures were down 3 cents at $64.31 per barrel by 1005 GMT. US West Texas Intermediate (WTI) crude futures were up 3 cents at $61.18 a barrel.
Brent was on track for a drop of around 0.1 percent this week, after last week’s 4.4 percent slide.
A build in US crude inventory reported the previous day was not as large as expected, given that stocks tend to rise towards the end of the winter as refineries conduct maintenance.
But with the threat of the United States sparking a trade war with some of its largest partners, financial markets were on edge. Prices of commodities stayed under pressure.
“Despite the global economy humming, we see fragility in the oil market,” Julius Baer head of commodities and macro research Norbert Ruecker said, adding that rising inventories put pressure on oil prices in the short term.
“Strong shale output growth challenges the market tightening narrative in the medium term,” he added.
The US Energy Information Administration said on Wednesday that US crude inventories rose by 2.4 million barrels in the week to March 2 to 425.91 million barrels, less than the 2.7 million barrel analysts had forecast.
China reported a steep monthly drop in crude imports in February, when the Lunar New Year holidays took place. Imports of crude dropped by more than 20 percent to a daily rate of 8.2 million barrels per day (bpd) from 9.4 million bpd in January.
Reuters commodities columnist Clyde Russell said imports in January and February combined gave a daily rate of about 9.02 million bpd, up 10.8 percent from the same period last year.
Rising US production, which reached 10.37 million bpd last week, remains a focus for investors.
“Crude is … under pressure from rising US production which hit a new high last week, now firmly above Saudi Arabia’s production level,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.
US output is expected to surge beyond 11 million bpd by late 2018, which would surpass the current No. 1 producer Russia.
This US increase is putting pressure on the Organization of the Petroleum Exporting Countries, Russia and other nations which have been curbing output to prop up prices but risk losing market share.
Source: Brecorder.com
