Why is that, when the overhang of crude equals almost 64 times a single day's demand-nearly 17% more than normal and able to come to market in a heartbeat?
Benchmark Brent crude futures briefly surged into positive territory, but edged back down again, after sources within the group said the Organization of the Petroleum Exporting Countries was considering extending production cuts into the second half of 2017. According to the most recent data, for January, inventories of crude and refined products stood 278 million barrels above this level.
Oil prices edged up on Friday as a drawdown in USA crude inventory eased concerns about a global supply glut.
Oil prices slipped on Monday despite news that OPEC was supportive of extending a six-month deal to cut output as investors continue to grapple with worries about growing US oil output and high inventories.
The oil industry in Texas and across the U.S. nervously awaited a weekly report from the U.S. Energy Information Administration on Wednesday, and for the reaction of crude oil traders who bid on New York Mercantile Exchange oil futures.
After the lifting of the sanctions, Shell and Total each have imported two consignments of Iranian oil, each to the tune of two million barrels, he said.
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Analysts say speculative investors are likely to keep reducing bullish positions, thanks to optimism amongst USA producers boosting drilling activity, which in part will offset OPEC attempts at reducing supply. However, if OPEC and other non-OPEC members decide to announce formal talks over extending the program then I think oil could rise $5.00 to $7.00 over a short period of time.
The weekly EIA report showed inventories fell by 237,000 barrels in the week to March 10, compared with analysts' expectations for an increase of 3.7 million barrels.
"If current production levels were maintained to June when the output deal expires, there is an implied market deficit of 500,000 bpd for 1H17, assuming, of course, nothing changes elsewhere in supply and demand", the IEA said.
In December 2016, OPEC finished a meeting with non-OPEC countries in Vienna, at which 11 non-OPEC producers made a decision to cut oil output by 558,000 barrels per day from January 2017 with Russian Federation cutting the output by 300,000 barrels per day. "However, the key to market performance this week is the response to the U.S. lift in rates".
Crude prices fell further in Asia on Monday as the supply response of US shale drillers to coordinated output cuts by OPEC and key producers and headlines from the G-20 meeting of finance ministers in Germany at the weekend dampening sentiment. However, U.S. shale producers can't continue to increase their output indefinitely.