Oil rises on tightening supplies; ample US output caps gains

Prices have been supported this year by an agreement between OPEC and its allies to limit their oil output by 1.2 million barrels per day. (Reuters)
Updated 18 April 2019
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Oil rises on tightening supplies; ample US output caps gains

  • Prices have been supported this year by an agreement between OPEC and its allies to curb oil output
  • Global supply has also been tightened further by US sanctions on OPEC members Venezuela and Iran
TOKYO/SYDNEY: Oil prices edged higher, supported by ongoing OPEC-led supply cuts and a surprise fall in US crude inventories, although gains were capped by strong US production.
Brent crude futures were at $71.71 a barrel at 0500 GMT, up 9 cents, or 0.1 percent, from their last close and not far off Wednesday’s five-month high of $72.27 a barrel.
US West Texas Intermediate (WTI) crude futures were at $63.81 per barrel, up 5 cents, or 0.1 percent.
US crude inventories fell by 1.4 million barrels in the week to April 12, compared with analyst expectations for an increase of 1.7 million barrels, Department of Energy (DoE) showed on Wednesday.
“The fundamental backdrop for oil prices remains broadly positive amidst tighter global supply for the current term.” said Benjamin Lu, commodities analyst at Singapore-based brokerage Phillip Futures.
Prices have been supported this year by an agreement reached by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, to limit their oil output by 1.2 million barrels per day.
Global supply has also been tightened further by US sanctions on OPEC members Venezuela and Iran.
Iran’s crude exports have dropped in April to their lowest daily level this year, tanker data showed and industry sources said, suggesting a drawdown in buyer interest ahead of expected further pressure from Washington.
But rising US oil production and concerns over the US-China trade dispute kept gains in check.
“A persistent rise in US oil output, together with lingering demand-side concerns emerging from the US-China trade dispute, is limiting price gains,” Abhishek Kumar, Head of Analytics at Interfax Energy in London.
US crude oil output from seven major shale formations was expected to rise by about 80,000 bpd in May to a record 8.46 million bpd, the US Energy Information Administration said in its monthly report on Monday.
Surging US production has filled some of the gap in supplies, although not all of the lost production can be immediately replaced by US shale oil due to refinery configurations.
“The unexpected drawdown in US commercial crude oil stocks was balanced by lower-than-expected withdrawals in the country’s gasoline and distillate inventories,” Kumar said.
Gasoline stocks fell by 1.2 million barrels, less than analysts’ expectations in a Reuters poll for a 2.1 million-barrel drop.
Distillate stockpiles, which include diesel and heating oil, fell 362,000 barrels, also not as much as forecasts for a 846,000-barrel drawdown, the EIA data showed.


China’s crude oil imports from Saudi Arabia up 43%

Updated 25 May 2019
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China’s crude oil imports from Saudi Arabia up 43%

  • Imports grew to 1.53 million barrels per day compared with 1.07 million a year ago
  • Sinopec Group and China National Petroleum Corp., the country’s top state-owned refiners, are halting Iranian oil purchases for loading in May, three people with knowledge of the matter said

BEIJING: China’s crude oil imports from Saudi Arabia rose 43 percent in April, making the Middle Eastern OPEC kingpin once again the top supplier to the world’s second-biggest economy, boosted by demand from new private refiners.
Saudi imports grew to 6.30 million tons, or 1.53 million barrels per day (bpd) on a daily basis, compared with 1.07 million bpd in the year ago period, according to data from the General Administration of Customs released on Saturday.
Saudi shipments were supported by higher refinery run rates at Hengli Petrochemical Co. Ltd, with production at the 400,000 bpd-capacity refinery in northeast China expected to reach optimal levels in late June. About 70 percent of the feedstock for Hengli came from Saudi Arabia.
Meanwhile Russian supplies were 6.12 million tons, or 1.49 million bpd, up from 1.35 million bpd in April last year.
China in April imported 3.24 million tons of crude oil from Iran, or 789,137 bpd, up from March’s 541,100 bpd, as companies ramped up buying before the scrapping of sanctions waivers the US had granted to big buyers of Iranian oil.
China Petrochemical Corp. (Sinopec Group) and China National Petroleum Corp. (CNPC), the country’s top state-owned refiners, are halting Iranian oil purchases for loading in May, three people with knowledge of the matter said.
Venezuela shipments stood at 1.9 million tons, or 462,813 bpd in April, up 85 percent versus 249,700 bpd in March, while crude imports from Iraq were 3.31 million tons, or 806,372 bpd, down from 904,500 bpd the previous month.