You are here: Home » Reuters » News
Business Standard

Oil falls on dip in China demand, surging U.S. output

Reuters  |  SINGAPORE 

By Gloystein

SINGAPORE (Reuters) - reversed earlier gains on Friday and fell as surging U.S. output as well as signs of weakening demand in weighed on markets, even though supply woes in and OPEC's ongoing production cuts offered crude some support.

After gaining some ground early in the session, Brent crude futures, the international benchmark for oil prices, were at $77.06 per barrel at 0551 GMT, down 26 cents, or 0.3 percent from their last close.

U.S. Intermediate (WTI) crude futures were down 18 cents, or 0.3 percent, at $65.77 a barrel.

China's May eased away from a record high hit the month before, customs data showed on Friday, with state-run refineries entering planned maintenance.

May shipments were 39.05 million tonnes, or 9.2 million barrels per day (bpd), according to the That compared with 9.6 million bpd in April.

Further weighing on prices has been surging U.S. output, which hit another record last week at 10.8 million bpd.

That's a 28 percent gain in two years, or an average 2.3 percent growth rate per month since mid-2016. It puts the close to becoming the world's biggest crude oil producer, edging nearer to the 11 million bpd churned out by

The surge in U.S. production has pulled down U.S. WTI crude into a steep discount versus Brent to more than $11 per barrel, its steepest since 2015.

"This is occurring because of the rapid increase in production from U.S. shale coupled with the tightening of supplies elsewhere through the actions of OPEC and Russia," said William O'Loughlin, at Australia's


Despite Friday's falls, Brent remains more than 15 percent above its level at the start of the year.

U.S. Jefferies said on Friday that the "crude market is tight and spare capacity could dwindle to 2 percent of demand in 2H18, its lowest level since at least 1984".

Markets have been tightened by supply trouble in Venezuela, where firm is struggling to clear a backlog of around 24 million barrels of crude waiting to be shipped to customers.

More generally, Brent has been pushed up by voluntary production cuts led by the dominated cartel of the Organization of the Petroleum Exporting Countries (OPEC) and by top Russia, which were put in place in 2017.

The group and are due to meet at its headquarters in on June 22 to discuss production policy.

"The June 22 OPEC meeting will now likely become the most important factor influencing (the) crude price," Jefferies said.

(Reporting by Gloystein; Editing by and Kenneth Maxwell)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, June 08 2018. 12:10 IST