Oil Slips as US Gasoline Stockpiles Climb, Crude Supplies Drop

US rig count rises 10 this week to 857; Texas up 6

US rig count rises 10 this week to 857; Texas up 6

Oil fell to a two-week low on Wednesday, after a surprising build in US gasoline inventories and a rise in domestic crude output that is partially offsetting cutbacks by other countries trying to reduce a global glut. Crude inventories fell 1.03 million bbl to 532.3 million last week, the agency reported Wednesday. Crude production rose to the highest since August 2015. Price drops accelerated as the dollar strengthened against its peers, curbing the appeal of commodities.

OPEC and other producers such as Russian Federation agreed to cut output by almost 1.8 million barrels per day in the first half of 2017 to drain a supply overhang that has persisted for nearly three years. Total volume traded was about 30 percent above the 100-day average.

Brent for June settlement fell 45 cents to $54.44 a barrel on the London-based ICE Futures Europe exchange. It was the lowest close since March 31. Oil prices jumped by more than 10 per cent following the deal with global benchmark Brent crude now trading above $55 per barrel.

"There's been a lot of attention paid to OPEC production cuts, while nearly nobody has focused on the gains elsewhere", Stephen Schork, president of Schork Group Inc., a consulting company in Villanova, Pennsylvania, said by phone. The American Petroleum Institute, an industry group, reported a 840,000-barrel drop in inventories late Tuesday.

EU Urges Turkish Authorities to Launch 'Transparent Investigations' into Vote Results
Turkey's PM Binali Yildirim has called on the country's opposition to respect the outcome of the April 16 referendum. The complaints would be reviewed before noon, Sadi Guven said in Ankara, state-run Anadolu Agency reported.

Iran will probably be allowed to keep its oil production unchanged if OPEC decides to extend its six-month agreement on output cuts beyond June, Kuwaiti Oil Minister Issam Almarzooq said, adding that the Persian Gulf OPEC member has shown strong compliance with the OPEC supply cut deal. However, still-large inventories and higher output from some producers such as the United States - which is not participating in the supply accord - have limited the rally.

"We should see an accelerating level of crude draws, something we've been waiting for a while", Cavan Yie, senior equity analyst at Manulife Asset Management Ltd.in Toronto, said by telephone. Historically, periods of weak crude oil prices coincided with the contango structure.

The declines are welcome news after steady gains earlier this year that pushed petroleum inventories to record levels. Analysts and traders surveyed by The Wall Street Journal had predicted that gasoline supplies would drop by 2 million barrels.

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