Oil Prices Drop 5% & OPEC Doesn't Increase Output Cuts

Oil Prices Drop 5% & OPEC Doesn't Increase Output Cuts

After all, a 4.2 million barrel decline is what the API had predicted the day before. But prices may rise to $60 if the decision meets market expectations.

Separately, data from the Energy Information Administration released Wednesday showed U.S. crude output jumped to 9.29 million barrels per day - the highest since August 2015.

However, OPEC officials generally believe the agreement is helping to bring the market closer to balance between supply and demand and that it should be extended into the second half of the year with the same numbers. Russian Federation is said to support prolonging the curbs, according to a government official. "I don't see any way you can spin this as bullish".

Hewson said gold prices had continued to come under pressure on the back of a stronger US dollar, after the US Federal Reserve left interest rates unchanged last night. However, gasoline demand slipped 2.7 percent over the last four weeks from the same period a year ago. Total volume traded was about 37% above the 100-day average.

The June crude contract was down $1.44 at US$46.38 per barrel and the June natural gas contract was down three cents at US$3.20 per mmBTU. Benchmark Brent crude LCOc1 was up 33 cents at $50.79. US crude stocks stood at 527.8 million barrels, only 7 million barrels from a record high. Crude production climbed for an 11th week, capping the longest stretch of gains since 2012. US production is at its highest since August 2015.

Traders pointed to soaring United States oil production, which has risen over 10 per cent since mid-2016 to 9.3 million bpd, levels not far off top producers Russian Federation and Saudi Arabia.

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Stephen Schork, president of Schork Group, a consulting company in Villanova, Pennsylvania, said in a Bloomberg Radio interview this morning that Saudi Arabia has failed to balance the global oil market with its oil production cuts, which OPEC could renew for another six months at a meeting later in May.

OPEC, Russia and other producers have agreed to curb production by 1.8 million barrels per day (bpd) until June 30.

Prices also fell as risks to crude production in Libya, which is not part of the OPEC deal, eased following news that two factions made progress toward a resolution of the nation's political crisis that has, at times, disrupted crude production.

"The market continues to hunt for a bottom", said Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut.

Silencing critics who predicted OPEC would cheat its own quotas, the cartel has shown considerable restraint this time around by overwhelmingly complying with its supply cut agreement.

The turnaround at Petroleos Mexicanos appears to be bearing fruit, propelling the oil producer to its first profit since 2012.

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