Crude oil eases on record USA production, OPEC supply hopes

Commodities

Commodities

It's tough to stay positive on crude when the world's three oil superpowers are likely to increase production.

U.S. West Texas Intermediate crude lost 16 cents, or 0.2 percent, to $66.88 a barrel by 0423 GMT, after falling nearly 2 percent on Thursday.

WTI fell $1.23 to $65.81 per barrel, while Brent declined by 81 cents to $76.75 per barrel, good enough for a half a percent increase for the week compared to WTI's 3 percent loss.

Net U.S. crude imports fell last week by 959,000 bpd as exports jumped 431,000 bpd to 2.2 million bpd.

On top of that, USA government data hasn't shown the usual sweep of crude inventory declines that's typical of the key gasoline-making season.

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On Thursday, the premium for Brent over WTI surpassed US$11 a barrel, the largest since early 2015.

US crude oil stockpiles fell more than expected last week, while gasoline and distillate inventories posted surprise builds as refiners ramped up their activity to the highest since January ahead of Memorial Day weekend, the Energy Information Administration said on Thursday. Surging output and a lack of pipeline capacity in the prolific Permian Basin shale play in Texas is exacerbating swelling US inventories.

Brent was set to rise 1.8 percent for the week.

Prices have fallen sharply in the past week amid expectations that OPEC will ramp up production, as well as a stronger dollar.

"Until transportation is incentivized to get crude to the coasts or production is shut in, "we're going to continue to see some weakness in WTI", Smith said".

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USA drillers added two oil rigs in the week to June 1, bringing the total to 861, the most since March 2015, General Electric Co's Baker Hughes energy services firm said yesterday. It was the eighth increase in nine weeks.

Russian Federation and the OPEC leader Saudi Arabia have signalled there could be a need to gradually boost oil production to prevent any supply shortages.

The speculator group cut its combined futures and options position in NY and London by 50,937 contracts to 370,980 during the week to May 29, the U.S. Commodity Futures Trading Commission said.

Brent found support from around midweek on remarks by Saudi officials that signaled the country wants to step up production only gradually in reaction to lost production out of Venezuela and, potentially, Iran, while keeping the agreement between the Organization of the Petroleum Exporting Countries and other major producers to curb overall production in place through the end of the year, wrote analysts at Commerzbank.

Rosneft PJSC is testing its capacity to bring back production it cut under the deal between Moscow and OPEC by boosting output this week by about 70,000 barrels a day, Renaissance Capital said.

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Wijnaldum added: "It is always hard to say what we can do, it depends on so many different things as to how we do next season ".

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