Oil Ticks Higher, But Strong Supply Pressure Remains
April 23 2017 - 11:41PM
Dow Jones News
By Jenny W. Hsu
Oil futures rebounded some to start the week in Asian trading
after skidding 7% last week, but market players doubt bargain
buying will be enough to hoist US benchmark prices away from $50 a
barrel near-term.
Crude came under fresh pressure midweek as U.S. production
showed further growth and gasoline supplies surprisingly
increased.
Meanwhile, more investors are now second guessing whether
current production cuts by Organization of the Petroleum Exporting
Countries and Russia will ultimately be enough to sufficiently cut
into global supplies amid the new gusher of U.S. oil. Data on
Friday showed the number of active oil rigs in the U.S. has risen
for 14th straight weeks to hit their highest level in more than a
year.
Doubts are so pronounced that even with typical bullish factors
like a weaker greenback and simmering geopolitical tensions, oil
prices are only modestly higher on Monday, said Michael McCarthy of
CMC Markets.
On the New York Mercantile Exchange, light, sweet crude futures
for delivery in June was recently up 0.4% at $49.83 a barrel in the
Globex electronic session. June Brent crude on London's ICE Futures
exchange gained 0.5% to $52.23.
Helping risk sentiment broadly across markets is results from
the first round of France's presidential election coming in as
expected. Analysts say the outcome has reduced, but not yet
completely wiped out, the possibility of France leaving the
European Union.
"But still, even this is not enough to hold up the upward
momentum," said Mr. McCarthy.
Crude traders, however, continued to closely eye OPEC. To date,
the cartel has reached a tentative agreement to sideline its
production beyond June, but there's no consensus for how long and
who are committed to such an extension.
"What worries the market is what if production cut doesn't work.
What else can OPEC do?" said Gao Jian, an analyst at SCI
International.
Nymex reformulated gasoline blendstock for May--the benchmark
gasoline contract--rose 0.4% to $1.6505 a gallon, May diesel gained
0.3% to $1.5582 and ICE gasoil advanced 0.6% to $470.25 a metric
ton.
Write to Jenny W. Hsu at jenny.hsu@wsj.com
(END) Dow Jones Newswires
April 23, 2017 23:26 ET (03:26 GMT)
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