Oil prices slip as US stocks surge, but global market tightens

Oil prices slip as US stocks surge, but global market tightens

The US crude inventories mounted to their highest levels in roughly 17 months amid record output.

But those of gasoline dropped by 7.7m barrels, which also put them at their five-year average, partly because many refineries were shut down during the seasonal maintenance period.

Crude markets have tightened this year as the United States imposed sanctions on oil exporters Iran and Venezuela while the producer club of the Organization of the Petroleum Exporting Countries (OPEC) has been withholding supply to prop up prices. The group pegged 2018 global oil demand growth at 1.41 million bpd.

"OPEC's ongoing supply cuts and USA sanctions on Iran and Venezuela have been the major driver of prices throughout this year, " said Hussein Sayed, Chief Market Strategist at futures brokerage FXTM.


Speaking at a conference in Abu Dhabi, Mazroui also said the UAE can raise its crude oil production up to 3.5 million bpd if needed.

Russian President Vladimir Putin kept his options open on extending the OPEC+ production cuts, and said that he doesn't support an "uncontrollable" increase in oil prices.

The agency, which coordinates the energy policies of developed nations, saw oil stocks in industrialized countries fall in February by 21.7 million barrels, putting inventories 16 million barrels above their five-year average.

Citing that a Libya tension is fanning the flames of investors' optimism, an oil price analyst, Tamas Varga of PVM said, "Libya's oil production and exports have not been jeopardized but the rise in tension is enough to send oil prices higher".


It said that US, Brazil, Russia, UK, Australia, Ghana, Sudan and South Sudan will be the main drivers of supply growth this year.

Meanwhile, the latest EIA report showed that the USA crude inventories rose 7 million barrels to 456.6 million barrels in the last week, their highest since November 2017.

Venezuela, in the throes of political troubles, sanctions and repeated power blackouts, pumped 289,000 fewer barrels per day than the previous month, taking production to 732,000 bpd. There are now about 4.5 times as many long positions in crude futures - bets that oil will rise - as there are short positions, or wagers that the commodity price will fall.

OPEC production meanwhile fell by 0.55 mbd in March to 30.13 mbd - a four-year low - largely due to cuts in Saudi Arabia and crisis-hit Venezuela, the IEA said.


But the group said that the market remained oversupplied and warned of slowing demand growth, according to S&P Global Platts. The global benchmark crude was at a premium of $7.48 to WTI for the same month.

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