Published: Sat, February 10, 2018
Money | By Armando Alvarado

U.S. sells oil to the Center East resulting from surging manufacturing

U.S. sells oil to the Center East resulting from surging manufacturing

Brent futures fell $1.87, or 2.9 percent, to $62.94 a barrel by 12:18 p.m. EST (1718 GMT), its lowest since December 14.

US West Texas Intermediate (WTI) crude was down 54 cents, or 0.9 per cent, at $60.61, having settled down 1 per cent in the previous session at its lowest close since January 2. Following the publication of the report, oil fell by 3.5%, with Brent trading around $65 per barrel and WTI near $61.30.

Brent for April settlement was little changed at $66.83/bbl on the London-based ICE Futures Europe exchange, and traded at a premium of $3.93 to WTI for the same month.

Oil slid to the lowest in four weeks after US crude stockpiles increased and domestic crude production touched a record-high.

March West Texas Intermediate crude oil futures plunged on Wednesday following the release of the U.S. Energy Information Administration's weekly inventories report that showed domestic crude supplies rose 1.9 million barrels for the week-ended February 2.

Financial markets sank on Monday after a sharp rise in USA bond yields raised concern over a possible increase in inflation and potentially higher interest rates.

Unexpectedly rapid growth in US onshore production from the Lower 48 states in recent months has caused the agency to re-benchmark its output numbers going forward.

Oil price chart Futures and indexes as of 9.40pm GMT
Oil slides as stronger dollar, rising US output weigh

However, if Helima Croft, head of global commodity strategy at RBC Capital Markets, proves correct, then there's still a chance the global market could swing the other way and suffer the equally undesirable outcome of overtightening, due to the worsening economy of one of Latin America's biggest oil producers. During the trading session, the S&P 500 stock index fell to its lowest level since October 5. That should continue to drive USA exports, pinching OPEC efforts to reduce supply, and puts the line to potentially overtake Russian Federation as the world's largest producer.

Meanwhile, the energy industry has grown more efficient after cutting costs in response to the plunge in crude oil prices in previous years, so they are now in a better position to improve revenue at lower oil prices.

The U.S.'s crude production last week caught up with Saudi Arabia, that averaged 9.92 million bpd in December, according to the most recent data based on OPEC's Monthly Oil Market Report released January 18.

"The Energy Information Administration (EIA) report yesterday showed that USA oil inventories increased, and production hit an all-time high".

This is the first USA cargo to be shipped to the Middle East. A rising dollar in recent days has also weighed on prices. Rising U.S. supplies and rig counts have added to the dollar's pressure on prices, he said.

The concerted production cuts by OPEC and friends have added strength to the market in the a year ago, but this in turn gave United States producers a green light to restart production.

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