Crude oil prices had been on a steady rise for most of the week on word that parties to a multilateral agreement, coordinated by the Organization of Petroleum Exporting Countries to curb production could be extended into early 2018, instead of year-end 2017. "But today the oil price depends little on these actions or does not depend at all".
Specifically, the revenue fact sheet released on Monday by the U.S. Energy Information Administration (EIA), revealed that Nigeria's crude oil revenue fell from the $37 billion recorded in 2015 to $26 billion in 2016.
Total gasoline inventories decreased by 400,000 barrels last week, according to the EIA, and remain above the upper limit of the five-year average range.
Meanwhile, gasoline inventories dropped by only 0.413 million against expectations for a draw of 0.731 million barrels while distillate stockpiles fell by 1.94 million barrels, compared to expectations of a 1 million decline.
West Texas Intermediate for June delivery dropped as much as 29 cents to $48.78 a barrel and was at $48.89 on the New York Mercantile Exchange at 9:06 a.m.in London. U.S. light crude rose 71c to $49,37 a barrel.
The U.S. operators are expected to relatively quickly adjust even to $30 per barrel oil, and they will rely on hedging gains or just outspend more in the short term.
"In contrast, oil supply in 2017 was revised up by 0.36 million barrels per day to average 58.25 million barrels per day - representing year-on-year growth of 0.95 million barrels per day, following changes in all quarters, mostly in the USA, based on U.S. actual production data from February and new forecasts for crude oil output".
Though the deal proposed a cut of 1.8 million barrels, commodity analysts are of the view that this number could be increased.
The downward correction eroded gains from the previous session when prices rose due to a drawdown in United States crude inventories and a slight dip in American production.
While that's the stated goal of OPEC's deal with other exporters to remove a combined 1.8 million barrels a day from the market, Currie thinks the cartel has another aim in mind. Russian Federation and Saudi Arabia said on Monday that they're in favor of extending output cuts for nine months to give global stockpiles more time to reach the level targeted by OPEC and its allies.
"Although U.S. commercial stocks are some 34 million barrels below the highest level seen last August, more hard work is needed to bring them down to the five-year average of 1.2 billion barrels", said Tamas Varga at brokerage PVM.
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