By Jenny W. Hsu 
 

Crude-oil prices moderated in Asia Friday as investors took profits following gains of over 1% during the New York session.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in April traded at $54.33 a barrel at 0224 GMT, down $0.12 in the Globex electronic session. April Brent crude on London's ICE Futures exchange fell $0.11 to $56.47 a barrel.

Overnight, oil prices got a boost from the U.S. Energy Information Administration's data that showed crude stockpiles there grew less than expected last week.

While the amount of oil in storage increased for seven straight weeks to hit new records, the 564,000 barrel increase was far short of the 3.4 million barrel addition anticipated by analysts and traders surveyed by The Wall Street Journal.

The smaller-than-expected increase was largely due to sharply lower volumes of imported crude, potentially a sign that supply cuts by major oil exporters are manifesting in the U.S, analysts said.

A group of 20 oil producers, including members of the Organization of the Petroleum Exporting Countries, have reduced their production in the past month in line with a landmark output cut agreement signed last year. Prices have since moved upward, but growing supplies from the U.S. is hindering them from breaching the $60 a barrel mark.

U.S. crude production at 9 million barrels a day last week was the highest level since early April 2016, according to the EIA data.

"It is apparent that U.S. oil producers have turned the taps back on," said Phin Ziebell, a senior analyst at National Australia Bank.

Oil watchers say rapid rise of U.S. shale oil could weaken oil producers' resolve to stick to the production cut pact after the initial period. OPEC's latest data shows the bloc has eliminated 890,000 barrels a day in January, the first full month after the agreement took effect, indicating a roughly 90% adherence rate among participant countries.

It remains to be seen how much longer the members will remain compliant under the looming threat of U.S. oil. A telling barometer of the group's commitment level would be the outcome of OPEC's meeting in May when members discuss whether or not to extend the cuts further.

Analysts say the short-to-mid term trading curve shows that most oil investors are still banking on a tighter oil market, and possibly a rebalance by end of this year due to the cuts. Steady demand growth in China and India will also help soak up a bulk of the surplus barrels.

However, the negative trend seen in the futures curve beyond 2018 "could likely be a reflection of concerns over the prospects of future production curbs beyond OPEC's six months agreement term," said Barnabas Gan, an economist at OCBC.

Nymex reformulated gasoline blendstock for March--the benchmark gasoline contract--fell 55 points to $1.5231 a gallon, while March diesel traded at $1.6525, 42 points lower.

ICE gasoil for March changed hands at $498.25 a metric ton, down $1.75 from Thursday's settlement.

Write to Jenny W. Hsu at jenny.hsu@wsj.com

(END) Dow Jones Newswires

February 23, 2017 22:46 ET (03:46 GMT)

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