Oil falls to two-week low as gasoline supply rises, dollar gains

Posted April 21, 2017

Looking ahead for oil, "the next big market mover looks to be when OPEC meets regarding an extension in production cuts on May 25", said Macaluso. USA crude futures were up 43 cents at $50.87 a barrel.

Earlier on Wednesday, the U.S. Energy Information Administration (EIA) said U.S. crude stocks fell 1 million barrels on the week, a bit less than anticipated.

USA energy production is the biggest risk to the bank's price estimates.

Last November, OPEC members along with non-OPEC countries such as Russian Federation have agreed to reduce their daily output by 1.8 million barrels during the first half of this year in a bid to end the global supply glut.

However, Saudi production rose to 10 million bpd in February, up from 9.75 million bpd the previous month, the Jodi data showed, as domestic refiners processed more crude oil.

More barrels could be on their way to market from USA shale fields as financial companies were investing billions in production, a Reuters analysis showed. A barrel of Brent crude has kept to around $55 in the second half of the last month and reached $56 only after the U.S. fired missiles at the Shayrat airbase in Syria.

Gasoline stocks posted a counter-seasonal build of 1.5 million barrels. Due to the long period of low energy prices, the authorities of the oil states are trying to find other sources of income.

Saudi Arabia, boasting the world's second largest oil reserves, is now leading world's oil exports and is one of the most influential OPEC member.

OPEC is due to meet on May 25 to weigh an extension of output cuts beyond June to alleviate a glut that has depressed prices for almost three years.

Brent for June settlement slipped 26 cents to $55.10 a barrel on the London-based ICE Futures Europe exchange, and traded at a $2.20 premium to WTI for the same month.

Prices rallied by 15 per cent since November 30, 2016 when Opec's 13 members led by the group's largest producer Saudi Arabia, agreed to curb output by more than one million barrels a day.

The bank is referring to the Organization of the Petroleum Exporting Countries' production cutback initiative, now in its third month of implementation; the Citi analysts stress, however, that failure to extend the cuts to the end of this year will send oil prices "precipitously lower".

Iran pumped just shy of its 3.8 million barrels a day allowed under the deal in the first quarter, according to the International Energy Agency.