Oil prices slide on bulging US crude inventories
March 22 2017 12:47 PM
Oil prices
Brent crude, the international benchmark, fell to $50.61 per barrel on Wednesday.

Reuters/London

* US inventories rose to 533.6mn barrels - API
* Opec inclined to extend cuts, wants non-Opec backing
* Rising US production undermines Opec reduction effort


Oil prices slipped back towards three-month lows on Wednesday after data showed US crude inventories rising faster than expected, piling pressure on Opec to extend output cuts beyond June.
A deal between the Organisation of the Petroleum Exporting Countries and some non-Opec producers to reduce output by 1.8mn barrels per day (bpd) in the first half of 2017 has had little impact on bulging global stockpiles of oil.
Brent crude, the international benchmark, fell 35 cents to $50.61 per barrel by 0907 GMT, heading back to its lowest level since Opec announced on November 30 its plan for cuts. The deal with non-Opec states was reached in December.
US light crude was down 35 cents at $47.89 a barrel, also heading back towards a three-month low.
"The lower the price goes, the higher the pressure on Opec to extend cuts," Commerzbank analyst Carsten Fritsch said.
Sources have said Opec is inclined to extend but wants backing from non-Opec producers, including Russia, even though such countries have yet to deliver fully on existing cuts.
On Tuesday, the American Petroleum Institute reported US inventories climbed by 4.5mn barrels to 533.6mn last week, a bigger rise than the 2.8mn analysts forecast.
Investors now want to see whether Wednesday's figures from the Energy Information Administration, a unit of the Department of Energy (DoE), confirm the rise.
"A look below $50 (for Brent) is quite possible today if DoE data show a similar pattern, but it's impossible to say how far below $50," Commerzbank's Fritsch said.
US shale oil producers have been adding rigs, pushing up the country's oil production to about 9.1mn bpd, from around 8.5mn bpd in late 2016.
"Opec's market intervention has not yet resulted in significant visible inventory drawdowns, and the financial markets have lost patience," US bank Jefferies said in a note.
The bank said Opec-led cuts would start having an impact in the second half of 2017, but added that US crude production was expected to grow by 360,000 bpd in 2017 and 1mn bpd in 2018.
US bank Goldman Sachs warned its clients in a note this week that a US shale-led production surge "could create a material oversupply in 2018-19".



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