Oil eases from five-week high, U.S. output rise undermines rally
Brent has risen in each of the previous six sessions, while WTI gained for the last five days.business Updated: Apr 11, 2017 16:40 IST
Crude oil edged back from a five-week high on Tuesday, as rising U.S. shale oil production weighed against a support from tensions in the Middle East and production cuts in OPEC and other states.
Brent crude, the international benchmark for oil, was down 10 cents from its previous close at $55.88 per barrel at 1051 GMT. Earlier in the session, Brent had climbed to its highest since March 7 at $56.16 a barrel.
U.S. West Texas Intermediate (WTI) fell by 12 cents to $52.96 a barrel, after touching a five-week high of $53.23 a barrel.
Brent has risen in each of the previous six sessions, while WTI gained for the last five days.
“We are getting into the high risk part of this rally. It has been going on for a long time,” said Ric Spooner, chief market analyst at CMC Markets in Sydney.
“I wouldn’t be surprised to see a bit of book squaring going on now, ahead of the U.S. inventory data which is due on Thursday morning Asia time,” he said, also noting that current prices have attracted shale oil producers in the past.
U.S. crude inventories have touched record highs at both the U.S. storage hub of Cushing, Oklahoma and in the U.S. Gulf Coast in recent weeks, according to U.S. government data.
A Reuters poll of analysts forecast a rise in U.S. crude inventories for a fourth straight week.
Data from industry group API is due out on Tuesday, while figures the U.S. Energy Information Administration will be released on Wednesday.
Several factors still offered support to oil prices.
Russian Energy Minister Alexander Novak said his country’s output cuts would reach 250,000 barrels per day (bpd) by mid-April, TASS news agency reported. Another shutdown at Libya’s largest field Sharara also kept oil off the market.
Russia was part of a deal between the Organization of the Petroleum Exporting Countries and other producing countries to cut output by 1.8 million bpd in the first six months of 2017.
“We have seen quite an encouraging market,” said Tamas Varga, analyst with PVM Oil Associates, adding Tuesday’s dip in prices looked like a temporary pause. “This market should be going higher.”
Tensions in the Middle East are also supporting prices, after last week’s U.S. missile strike on a Syrian air base. Syria produces only small volumes of oil, but the Middle East accounts for more than a quarter of the world’s crude output.
(Additional reporting by Naveen Thukral; in Singapore; Editing by Edmund Blair)