Oil edges up on decline in US crude stocks

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Oil prices edged up on Thursday, but the market continued to be weighed down by high production, especially in the US, the market shows.

Brent crude futures LCOc1 were at 50.36 US dollar per barrel at 0657 GMT, up nine cents, or 0.2 percent, from their last close. US West Texas Intermediate (WTI) crude futures CLc1 were at 46.80 US dollar a barrel, up just two cents.

The slight gains followed a more than one percent fall in the previous session.

AFP Photo

Energy Information Administration (EIA) data on Wednesday showed that commercial US crude oil stocks C-STK-T-EIA have fallen by almost 13 percent from their peaks in March to 466.5 million barrels. Stocks are now lower than in 2016.

"If inventory declines continue at this pace, stocks will fall back below the five-year average in around two months," said William O'Loughlin, an analyst at Australia's Rivkin Securities.

"The pace of the declines indicates that the OPEC production cuts are affecting, although the current oil price suggests that the market is skeptical about the longer-term prospects for a rebalancing of the oil market," he added.

ANZ bank said the market seemed "to focus on the rise in (US) production", which jumped by 79,000 barrels per day (bpd) to 9.5 million bpd last week, its highest level since July 2015, and 12.75 percent above the most recent low in mid-2016.

An offshore oil platform is seen in Huntington Beach, California September 28, 2014. /Reuters Photo

The soaring US output undermines efforts by the Organization of the Petroleum Exporting Countries which, together with non-OPEC producers like Russia, has pledged to restrict production by 1.8 million barrels per day (bpd) between January this year and March 2018.

Brent prices are down by almost 12 percent since the start of the cuts in January. The subdued market sentiment also has roots on the demand side.

Oil producers have enjoyed years of rocketing demand, fueled largely by China's voracious thirst coming from over two million new car sales a month. But this boom is coming to an end as its vehicle sales slow in a maturing market, and as cars become more efficient and start using alternative fuels.

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Source(s): AP ,AFP ,Reuters