Bearish Case for Oil Prices Gets Stronger, Supply Surges

Bearish Case for Oil Prices Gets Stronger, Supply Surges”

In matter of 11 months, crude oil production in the USA increased by close to 14%.

Information released Wednesday by the Energy Information Administration U.S. commercial crude inventories rose by three million barrels in the week to February 23 to a total of 423.5 million barrels. Last week, the US Energy Information Administration said there was a surprise drop in oil reserves against a background of lower imports and higher exports.

By 1:12 p.m. Eastern time (1812 GMT), Brent was down 67 cents to $66.83 a barrel, while U.S. West Texas Intermediate crude CLc1 fell 72 cents to $63.18.

But as far as Francisco Blanch, head of commodities and derivative research at Bank of America, is concerned, we have two years of breathing room before a significant change in the crude market could render al-Falih's plan of global monitoring obsolete.

Brent crude was down 40 cents, or 0.6 percent, at United States dollars 66.23 a barrel.

The International Energy Agency has said improved crude oil output in Nigeria made up for the losses recorded by some OPEC member countries to steady production month-on-month at 32.16 mb/d in January.

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ GRAPHIC: Russia vs Saudi vs US oil production ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^.

Elsewhere, gasoline futures were nearly unchanged at $1.989 a gallon, while natural gas futures gained 1.47% to $2.696 per million British thermal units.

"Production numbers and rig counts are just as important at this stage, particularly with United States production breaking through the 10 million barrel per day level", said McCarthy.

The rise in inventories came even as refineries boosted activity in the most recent week.

In disclosing this in its Oil Market Report for February, IEA also noted that compliance with OPEC supply cuts reached an unprecedented high of 137 per cent in the review month. More reliable monthly figures are due later in the day, and analysts expect that report to show another large upward revision.

Ironically, the second US shale boom came in the wake of the OPEC/non-OPEC production cut deal masterminded and led by OPEC's Saudi Arabia and non-OPEC's Russian Federation.

"In spite of refiners undergoing maintenance, they continue to process more crude compared to previous years adding to gasoline and diesel supply", said Andrew Lipow, president at Lipow Oil Associates in Houston. Equities markets weakened on Wednesday, while the US dollar.DXY hit a one-month high. FRX/ A strong dollar makes oil more expensive for buyers using other currencies.

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