US crude has been riding an uptight slope settling inches lower on Wednesday trading and continues to fall opening Thursday’s session. The loss was moderate, but the US stockpile weighed on the market hitting a record high with a little bit of help from producers that shale oil production.
Recent data coming from the New York Mercantile Exchange; Globex electronic session reveals that light, sweet crude futures has been marginally falling for deliveries in April traded at $53.54 a barrel which is down a total of 29 cents or 0.5%. On the other hand, May deliveries for Brent crude on the London’s ICE Futures exchange plummeted as much as 0.5 percent, losing around 27 cents trading at $56.09 per barrel. While US West Texas Intermediate or WTI also loses some futures by 10 cents or 0.2% to $53.73 a barrel, and Benchmark Brent crude also suffers a loss of 3 cents trading at $56.33.
Virendra Chauhan, an oil analyst at Energy Aspects in Singapore said that "The market is largely a range-bound market, although positioning is quite skewed at present which could mean that when things do pop, it could be a violent swing," Chauhan also pointed that the current weakness US Brent crude experience is an offset from the current historical US inventory statistics yesterday.
US Oil Inventories Reaches Historical Feat
The US Energy Information Administration has revealed that US crude inventories are topping on a historical high, figures began to surpass 1.5 million barest to 520.2 million barrels according to circulated data. The significant rise in the inventories is highly influenced by the notable imports from the middle-eastern countries such as Saudi Arabia, Iraq, and a wild card in the group, Canada. The sharp domestic production also played a big role with the monumental milestone; current production has increased to 9 million barrels for the past couple of weeks.
OPEC Imports Significantly Stronger
Most of the data reported by the Energy Department from the fluctuating inventories are from barrels imported from Saudi Arabia; as a matter of fact the country is responsible for as much as 70% of OPEC proposed cuts, and Saudi Arabia also stands as the second biggest source of US crude imports, just behind Canada.
Crude oil imports were averaging 1.327 million barrels per day for four weeks ending last February 24, it was 37% higher on a year-on-year basis and 39% higher since last December before OPEC cuts were executed. This provided information that OEPC cuts are working, and signifying stronger imports over base periods. According to a commodities strategist at Commonwealth Bank of Australia’s Vivek Dhar, “The OPEC decision could be the first disappointment even though at the moment members are showing a 90% compliance rate to the production cut deal.”
Another reason why oil prices were down is because of the sudden surge in the dollar, siding with the increasing odds Fed rate hikes as early as later this month. The sudden uprising in the dollar meant a deterrent for buyers using other currencies since business are mainly conducted in dollars. The dollar index has been recently rising against a basket of major currencies and last saw an increase of 0.09% at 91.58.
Crude oil has been significantly down from the past months because of the aggressive dollar that is highly influenced by the Fed’s decision to bump up the interest hikes. While OPEC countries are mostly compliant on the production cut, a succumbing thought of anyone can cut their ties is still a lingering possibility.
for your round-the-clock market update! We provide you with the latest news surrounding Forex, commodities, automobile, consumer, financial, economy, and technology. Never miss any news beat! Subscribe now!