Oil Slows Down After Rising Inventory and OPEC Output

Oil prices eased slightly on Friday as evidence this week of rising crude supplies from OPEC members offset Middle East tensions and signs of a slowdown in U.S. output.

Brent crude was still within sight of its 2015 high reached on Thursday and has rallied 16 percent in April, supported by conflict in Yemen and the prospect that lower prices are starting to curb U.S. shale output.

At 1302 GMT, Brent crude for June LCOc1 slipped 12 cents to $63.86 a barrel. It hit a 2015 high of $64.95 on Thursday. U.S. crude for May CLc1 was down 52 cents at $56.19 a barrel.

Pressuring prices on Thursday, the Organization of the Petroleum Exporting Countries (OPEC) said in its monthly report that its March production jumped 810,000 barrels per day (bpd) to 30.79 million bpd, led by Saudi Arabia.

A day earlier, the International Energy Agency, which advises industrialized countries, also reported a surge in OPEC production to 31 million bpd, which it said could delay a tightening in the global market.

“There is the prospect in the second quarter of an enormous 2.4 to 2.7 million bpd stockbuild if OPEC production continues at 31 million bpd,” said David Hufton of brokers PVM.

“Could it be that Saudi Arabia wants to frighten non-OPEC producers such as Russia to the production negotiation table?”

Talks between OPEC and other major producers triggered speculation about deals to cut production and supported oil prices on Wednesday, though most analysts said an agreement was unlikely.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza