Oil edges off three-month low, but glut worries fester
TOKYO – Crude prices inched up on Friday after dropping to their lowest in more than three months the session before, pressured by concerns that a global supply glut is proving stubbornly persistent.
US West Texas Intermediate crude (WTI) was up 40 cents at $49.68 a barrel at 0151 GMT. It fell below $50 on Thursday for the first since mid-December, when OPEC and other producers agreed to cut output.
Brent crude was up 35 cents at $52.54 a barrel. On Thursday, it settled down 92 cents, or 1.7 percent, at $52.19 a barrel, after slumping 5 percent the day before in its biggest percentage decline in a year.
Market confidence has taken a hit after a period of higher prices enticed more US shale oil companies to drill more wells and as stockpiles have remained high.
Data showed crude stocks in the United States, the world’s top oil consumer, swelled by 8.2 million barrels last week to a record 528.4 million barrels.
Still, US stockpiles are expected to start dwindling once maintenance is completed at refineries, ANZ said in a research note.
“With the seasonal maintenance period for refineries coming to a close, we would expect crude runs to increase substantially later in March and April. This should see inventories start to fall,” it said.
Nonetheless, US drilling has also picked up, with producers planning to expand crude production in North Dakota, Oklahoma and other shale regions, while the Permian, America’s largest oilfield, has seen output jump.
Senior Saudi energy officials told top independent US oil firms in a closed-door meeting this week that they should not assume OPEC would extend output curbs to offset rising production from US shale fields, two industry sources told Reuters on Thursday.
Energy ministers and senior oil executives are meeting this week at CERAWeek in Houston, the biggest US gathering of the oil industry. -Reuters