Oil prices regain some ground, but oversupply weighs

What Was Weatherford’s Correlation with Crude Oil on April 13

Latest data from the Energy Information Administration showed USA output rose to 9.25 million barrels a day last week, the highest level since August 2015. Crude prices also fell, despite a draw in crude inventories.

China's March gasoline output rose 2.5 percent year on year to 11.24 million tonnes, the highest level since at least April 2014, data from China's National Bureau of Statistics showed on Wednesday, adding fuel into an Asian market that is already well supplied.

Still, Saudi energy minister Khalid al-Falih on Thursday said a preliminary agreement to continue cuts for another three or six months is within reach and could be approved at OPEC's next meeting on May 25.

West Texas Intermediate crude oil has given up most of its early gains.

Crude futures were trading more than 30 cents higher in Asia early Thursday, but the recovery, against a rout of almost $2/barrel at the previous day's close, was more likely bargain-hunting than the start of a full correction, as the weekly counter-seasonal build in United States gasoline inventories continued to weigh on market sentiment.

"A build to gasoline inventories is tilted a little bearish, although a build of 2.5 million barrels on the Gulf Coast was in response to higher refining activity", said Matt Smith, director of commodity research at ClipperData.

Both benchmarks had traded more than 50 cents higher earlier in the day, but gains eased at the start of US trading hours. That surprise build in gasoline, along with an increase in US production, pressured prices.

USA commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, decreased by 1 million barrels from the previous week, the Energy Information Administration (EIA) said in its Weekly Petroleum Status Report.

"At 532.3 million barrels, U.S. crude oil inventories are near the upper limit of the average range for this time of year".

OPEC members Saudi Arabia and Kuwait signaled that the Organization of the Petroleum Exporting Countries and other producers, including Russian Federation, would likely extend their oil output cut beyond June.

"Five of the last trading days we've been lower", he said.

"With questions hanging over US gasoline demand, any further product builds will act as a brake on the oil price recovery", he said.

Related news: