" />
Published On: Fri, Feb 9th, 2018

Oil price falls to five week low as US production rises


Oil spiraled to the lowest in five weeks as surging U.S. crude supply coupled with technical indicators signaling the potential for further price declines.

Bloomberg reports that futures fell for a fifth day in New York, posting the longest streak of losses since April 2017. The U.S. benchmark flirted with its 50-day moving average, a key technical level, while other indicators of market momentum showed the decline may not be over. The negative chart formations follow reports this week that U.S. oil production is surging even faster than previously forecast.

“The market narrative is clearly uncomfortable with the lift we are seeing in U.S. production,” Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, said by telephone. “There is no doubt that production is recovering and that’s a negative.”

Analysts and traders are bearish on WTI crude futures, according to a survey by Bloomberg. U.S. crude production jumped to an all-time weekly high of 10.25 million barrels a day last week, according to Energy Information Administration data released Wednesday.

That followed a government forecast that American daily output will breach 11 million in November, a year earlier than previously expected. The weekly U.S. output figure is now higher than the 10 million barrels Saudi Arabia produced on a daily basis last month.

“That enormously steep rebound in Lower 48 production is what’s weighing on the market,” Michael Loewen, a commodities strategist at Scotiabank in Toronto, said by telephone. “The market is not entirely sure how to digest this information.”

West Texas Intermediate for March delivery fell 64 cents to settle at $61.15 a barrel on the New York Mercantile Exchange. Total volume traded was about 52 percent above the 100-day average.

See also: Oil technical analysis signals potential further price retreat

Brent for April settlement declined 70 cents to end the session at $64.81 on the London-based ICE Futures Europe exchange, the lowest level since December. The global benchmark traded at a $3.87 premium to WTI for the same month.

U.S. oil output increased for a fourth week, up by 332,000 barrels a day last week, the EIA data showed. Crude in the nation’s storage tanks and terminals increased by 1.9 million barrels, while gasoline and distillate stockpiles also expanded, the data showed.

© 2018, Hallmarknews. All rights reserved. Reference and link to this site is required if you wish to reuse any article.

Reactions from Facebook

comments and opinions

Leave a comment

XHTML: You can use these html tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>