Published: Fri, April 21, 2017
Economy | By Annette Adams

Oil prices dip on bloated USA market, mixed Saudi signals

"Unless the (EIA) data shows something drastically different, this report should cause a severe dent in the bullish case (for oil prices)", said Sukrit Vijayakar, director of energy consultancy Trifecta. Gasoline consumption also declined by about 1 percent to 9.3 million barrels. "We would not buy the intraday dip".

USA crude futures closed the day down 3.76 percent, trading at $50.44 per barrel and hovering only slightly above the key $50 level, while Brent crude futures dropped almost $2.30 to trade around $52.70 a barrel. It was the biggest decline since March 8 and the lowest close since April 3. Total volume traded was about 9% above the 100-day average.

Brent crude futures dipped 18 cents at $54.71 a barrel as of 15:16 GMT, while USA crude futures lost 19 cents to $52.22 a barrel. The global benchmark crude ended the session at a $2.08 premium to June WTI.

US inventories now sit at 532.3 million barrels, only down about 3 million units from the record reached in March.

"There's been a lot of attention paid to OPEC production cuts, while nearly nobody has focused on the gains elsewhere", Stephen Schork, president of Schork Group Inc., a consulting company in Villanova, Pennsylvania, said by phone. However, that level was still near a record high.

Oil prices regained some ground on Thursday after steep losses the previous day, with a slight drop in USA crude inventories stoking hopes that a global supply overhang might slowly retreat.

Data from the American Petroleum Institute (API) on Tuesday showed that US markets remained bloated. American refiners typically boost operating rates at this time of year as they prepare for the summer surge in gasoline demand. "The reasons are twofold".

Iran pumped just shy of its 3.8 million barrels a day allowed under the deal in the first quarter, according to the International Energy Agency.

USA gasoline inventories rose unexpectedly last week as refineries continued to ramp-up, but the resulting drawdown in oil stockpiles was also less than anticipated.

The market received a modicum of support from comments on Wednesday by Mohammed Barkindo, secretary-general of the Organization of the Petroleum Exporting Countries, that the group was committed to cutting inventories.

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