United States (US) West Texas Index (WTI) crude prices slipped into negative territory for the first time ever over storage capacity constraints after COVID-19 hit the demand - Photo: Special

JAKARTA (TheInsiderStories)Oil prices dipped on Wednesday (04/03) after rallying for three straight days. The rising United States (US) crude stockpiles offset support from OPEC supply cuts and US sanctions on Iran and Venezuela has triggered the price.

The US commercial crude inventories surged by 7.2 million barrels, the Energy Information Administration reported. Despite the unexpected increase, oil prices did not lose much ground after the report.

The US West Texas Intermediate crude settled 12 cents lower at US$62.46, having earlier hit $62.99, the highest level since Nov. 7. Meanwhile, Brent futures fell 6 cents to $69.31 from earlier reached $69.96 — the highest since Nov. 12, when they last traded above $70.

The market appeared to be taking the stockpile surge in stride because the headline increase was driven by a big jump in stocks in the US Gulf Coast, one of five regions tracked by Environmental Impact Assessment. Inventories there jumped by 8.7 million barrels last week.

That increases appears to be largely due to refinery downtime in the US refining hub and disruptions in ship traffic related to a fire at a petrochemicals storage facility.

EIA reported, the US gasoline stockpiles fell by 1.8 million barrels, and distillate fuel inventories, which include diesel and home heating fuel, dropped by 2 million barrels. Preliminary weekly data from EIA show US production rising to 12.2 million barrels per day, which would be a record if confirmed in later readings.

Oil prices have been supported for much of 2019 by efforts by OPEC and allies such as Russia, who have pledged to withhold around 1.2 million barrels per day of supply this year. Reportedly, supply from OPEC countries hit a four-year low in March.

Oil production from Russia fell to 11.3 million barrels per day last month but missed the country’s target under the supply deal. BNP Paribas noted, that OPEC crude oil production will average 30.1 million barrels per day in 2019, down from 31.9 million barrels per day in 2018, reducing an earlier forecast for this year by 200,000 barrels per day.

Three of eight countries granted waivers by Washington to import oil from Iran have cut the imports to zero, the US official said on Tuesday, adding that improved global oil market conditions would help reduce Iranian crude exports further.

However, analysts say it remains unlikely that Trump administration will not renew some of the waivers, despite officials continuing to speak publicly about zeroing out Iran’s crude exports.

Vice President Mike Pence said on Tuesday the US would continue to pressure Venezuela’ oil industry and those who support it with economic sanctions, citing world oil prices as low enough to allow for the measures.

Venezuela’ state-run energy company, PDVSA, kept oil exports near 1 million barrels per day in March despite US sanctions and power outages that crippled its main export terminal, according to the company documents and Refinitiv Eikon data.

US crude stocks rose unexpectedly last week, while gasoline and distillate inventories drew, industry group the American Petroleum Institute said late on Tuesday.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com