Reuters: Oil stable as U.S. production, Chinese imports hit record levels

08:55, 08 November 2018
Economy
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REUTERS

Front-month Brent crude oil futures were at $72 a barrel at 0554 GMT, down 7 cents from their last close, Reuters said.

U.S. West Texas Intermediate (WTI) crude futures were at $61.72 per barrel, up 5 cents from their previous settlement.

Weighing on prices was record U.S. crude production, which hit 11.6 million barrels per day (bpd) in the week ending November 2, according to Energy Information Administration (EIA) data released on Wednesday.

That's a threefold increase from the U.S. low reached a decade ago, and a 22.2 percent rise just this year. It makes the United States the world's biggest producer of crude.

More U.S. oil will likely come. The EIA expects output to break through 12 million bpd by mid-2019, largely thanks to a surge in shale oil production.

Meanwhile, U.S. crude inventories rose by 5.8 million barrels in the week ending November 2, to 431.79 million barrels, the EIA said.

Crude stocks moved back above their five-year average levels in October.

Production has not just risen in the United States, but also in many other countries, including Russia, Saudi Arabia, Iraq and Brazil, stoking producer concerns of a return of oversupply that depressed oil prices between 2014 and 2017.

Read alsoReuters: Oil dips amid well-supplied market, Iran sanction waivers

"Producers are concerned about the potential oversupply ... after EIA reported that crude inventories rose by 5.8 million barrels," said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.

With output overall rising, supply is ample despite the Iran sanctions now in place, prompting rumblings within the Middle East dominated Organization of the Petroleum Exporting Countries (OPEC) that renewed supply cuts may be needed next year to prevent a glut.

"OPEC and Russia may use cuts to support $70 per barrel," said Ole Hansen, head of commodity strategy at Saxo Bank.

Countering concerns of a renewed glut were record Chinese crude imports.

"Producers are concerned about the potential oversupply ... after EIA reported that crude inventories rose by 5.8 million barrels," said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.

With output overall rising, supply is ample despite the Iran sanctions now in place, prompting rumblings within the Middle East dominated Organization of the Petroleum Exporting Countries (OPEC) that renewed supply cuts may be needed next year to prevent a glut.

"OPEC and Russia may use cuts to support $70 per barrel," said Ole Hansen, head of commodity strategy at Saxo Bank.

Countering concerns of a renewed glut were record Chinese crude imports.

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