Crude falls on US inventory increase and record high Saudi output

James Dennis

08-Apr-2015

(recasts paragraph two and three for clarity)

Crude futures fall againSINGAPORE (ICIS)–Crude fell on Wednesday morning with US WTI crude futures falling more than $1/bbl  following a huge build in the US stocks revealed in industry data and record-high Saudi production.

At 04:49 GMT, May Brent crude on London’s ICE futures exchange was trading at $58.26/bbl, down by $0.84/bbl from the previous close. Earlier, the North Sea benchmark fell to a session low of $58.20/bbl, down by $0.90/bbl.

May NYMEX light sweet crude futures (WTI) were trading at $52.94/bbl, down by $1.04/bbl from the previous close. Earlier, the US benchmark fell to a low of $52.77/bbl, down $1.21/bbl.

Data from the industry body the American Petroleum Institute (API) for the week ending 4 April revealed a massive 12.2m bbl increase in US crude stocks. This included a 1.2m bbl increase in crude stocks at the key Cushing, Oklahoma delivery terminal for WTI.

Traders now await the release of the more widely followed official US government data from the Energy Information Administration (EIA), which should be released later on Wednesday. US crude stocks are presently at record high levels amid increases in domestic crude output.

Further downward pressure on prices was generated by news from Saudi Arabia that its crude production in March hit a record 10.3m bbl/day. 

Saudi oil minister Ali al-Naimi who was speaking to reporters gave no reason for the increase, but said production would likely remain at around 10m bbl/day.

Increases in Saudi supply underpins  the world’s largest exporters  commitment to maintain market share in the face of increased global production heightened by the US shale oil boom. Saudi Arabia has been targeting customers in Asia with recent cuts in its prices for May crude supplies to the region.

The global oil market had earlier been boosted  on Tuesday after the EIA lowered its 2015 US production growth forecast from 700,000 bbl/day to 550,000 bbl/day.

World oil demand growth forecast for 2015 was raised by the EIA to 1.04m bbl/day and for 2016 to 1.11m bbl/day.

Also providing support on Tuesday, was a Labor Department’s report in the US showing jobs openings hitting a 14-year high in February which gave the stock market a boost.

Additional reporting by Ignacio Sotolongo

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

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