U.S. crude eases for 3rd day on expectations of higher supplies

U.S. crude eases for 3rd day on expectations of higher supplies

Oil prices retreated on Friday after strengthening early in the session as U.S. President Donald Trump's remarks on trade led the dollar to strengthen against other currencies, weakening greenback-denominated commodities including crude.

Meanwhile in the USA, bottlenecks in key shale plays such as the Permian basin are keeping record-breaking levels of output trapped.

But despite the differential as well as substantial recent losses for both benchmarks, at least one analyst believes there is something else to consider, namely the idea that prices won't keep falling because it will be tough for even record-breaking US output to meet global demand.

A tsunami of USA crude oil should be headed toward Asia, according to pricing on futures exchanges, but the reality in the physical market tells a somewhat different story. The global benchmark traded at a $11.30 premium to WTI for July, with the more active August spread at a $10.61 premium.

The biggest continuing factor is the influence of rising U.S. output.

"The U.S. crude complex has been recently undermined by a well-documented and potent cocktail of logistics constraints", PVM Oil Associates analyst Stephen Brennock wrote in a report.

The ministers "emphasized the need for healthy market conditions that stimulate adequate investments in the energy sector, in order to ensure stable oil supplies are made available in a timely manner to meet growing demand and offset declines in some parts of the world", according to the statement issued Sunday.

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Also at the forefront of investors' minds is OPEC and its allies' next step on their agreement to curb output.

Venezuela, whose output has plunged due to an economic crisis, told OPEC its production fell to 1.505 million bpd in April, believed to be the lowest in decades. The proposal is yet to be approved by other partners, and officials from some nations have said they aren't in favor.

NEW YORK, June 2 ― Oil prices retreated yesterday after the dollar rose on better-than-expected United States employment data, which pressured greenback-denominated commodities, including crude.

During the said week, Organization of Petroleum Exporting Countries (OPEC)'s basket price stood at $76.41 per barrel with 65 cents increase compared to the preceding week.

Brent futures for July settlement, which expire Thursday, rose 0.7 percent to $78 a barrel on the London-based ICE Futures Europe exchange.

OPEC's oil production dropped in May by 70,000 bpd to 32.00 million bpd on the back of outages in Nigeria and a continuous decline in Venezuela that dragged the cartel's total production to the lowest level since April 2017, according to the monthly Reuters survey. Output has risen for 14 straight weeks as drillers put more rigs to work. Prices for physical barrels of US light sweet crude delivered at Midland are at their largest discount to the benchmark USA futures price in nearly four years.

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