After Wednesday’s gains of 4.2%, oil fell back by 3.1%, now standing at $45.3 per barrel.
U.S oil inventories on Wednesday from the Energy Information Administration recorded 9.622 million barrels more than the previous week’s figure of 4.512 million versus expectations of 3.750 million. With lower U.S. refinery runs and increases in domestic crude oil production, U.S. commercial crude oil inventories at the end of February provided the most days of supply since the mid-1980s. Commercial crude inventories were sufficient to supply 29 days of U.S. refinery demand, based on expected refinery runs in March.
Oil price was also affected over supply fears following the statement from Kuwait regarding OPEC’s decision to maintain market share through continued output levels. At this point on Thursday, oil was heading for its fifth weekly loss.
Kuwait's oil minister, Ali Al-Omair, said on Thursday, "Within OPEC we don't have any other choice than keeping the ceiling of production as it is because we don't want to lose our share in the market," as reported by Reuters. OPEC United Arab Emirates Oil Minister, Suhail bin Mohammed al-Mazroui, confirmed that it will not hold an emergency meeting, but stick to the next scheduled meeting in June.
According to analysts at Societe Generale and DNB, Saudi Arabia’s plans to expand local refineries while maintaining its share of the global crude market point to one thing: ‘higher production’.
In a note from Societe Generale, “The world’s largest oil exporter will probably increase output this year to feed new refineries, deepening a global supply glut. The kingdom may go as high as 10 million barrels a day by April, according to Torbjoern Kjus, an analyst at DNB in Oslo. That would be the most in more than two years, according to data.”
Additionally, Iraq’s exports rose to 2.66 million barrels per day in March as delayed cargoes from February were finally cleared from bad weather, subsequently producing a glut into the market.
MT4 Chart: Oil
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