Global Oil Prices Down on Bearish OPEC Data
May 02 2016 - 8:20AM
Dow Jones News
LONDON—Oil prices softened Monday with global crude benchmark
Brent and its U.S. counterpart West Texas Intermediate down on the
back of bearish production data from the Organization of the
Petroleum Exporting Countries.
Brent was down 1.25% at $46.78 for July cargoes while WTI dipped
0.89% on the New York Mercantile Exchange at $45.49 a barrel for
June deliveries, paring back strong April month-on-month gains.
The OPEC data obtained by news agency Reuters suggest that April
production from the producer group was up 170,000 barrels a day
month-on-month at 32.64 million b/d.
Germany's Commerzbank said in a note that OPEC's April output
could have been much higher without outages in Kuwait, the United
Arab Emirates, Venezuela and Nigeria that meant the figure fell
just short of January's record of 32.65 million b/d.
After the recent bull run of oil, which hit
five-and-a-half-month highs Friday, the OPEC production figures
reinforce the concerns many observers have in terms of the bearish
oversupply fundamentals still gripping the market. This may have
negative impact on prices this week.
One positive for prices this week could be the continuing crisis
now engulfing the U.S. shale oil sector with negative news always
likely to provide a tailwind for prices.
The London-based Energy Aspects said that many players were
experiencing cash-flow issues with even global oil-field services
giants Schlumberger and Halliburton recording operational
losses.
"Financial pressure is the current driver of production and it
is the service companies whose revenues have been squeezed to
unsustainable levels," the think-tank said in a note.
Oil-field services company Baker Hughes reported a decline of 11
drilling rigs in the U.S. to 332.
This is the lowest level in six-and-a-half years and down 50%
from 12 months ago according to the Copenhagen-based Global Risk
Management.
Meanwhile, the U.K. bank Barclays said Chinese oil demand grew
by 180,000 b/d in the first quarter. Chinese oil consumption is a
key indicator of global demand growth and the bank stated in a note
that the figure was lower than in recent years.
"A key area to watch is the Chinese car industry," Barclays
said. "We believe car sales should remain solid in 2016."
Chinese Manufacturing PMI was slightly below expectations when
published Monday which could give a slight headwind for prices.
Write to Kevin Baxter at Kevin.Baxter@wsj.com
(END) Dow Jones Newswires
May 02, 2016 08:05 ET (12:05 GMT)
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