Published: Tue, June 06, 2017
Finance | By Laverne Griffith

US crude stockpiles slump as refining surges to record high

US crude stockpiles slump as refining surges to record high

While U.S. government data released on Thursday showed that crude inventories fell twice as much as forecast last week, rising exports and production suggest the glut is lingering.

As more United States drilling mean greater hardship for OPEC and other major producers' attempt to control output so as to cut the global supply glut and alleviate prices.

Brent crude has fallen more than 5% this week, after investors were disappointed OPEC didn't do more to address the global supply glut.

Market analysts are troubled by a growth in US crude production that is straining efforts from the Organization of the Petroleum Exporting Countries to reduce global oversupply.

Russian Federation in the past had scoffed at efforts to cut back on production, but is now one of the main contributors to the effort outside of OPEC.

Domestic gasoline and diesel prices are expected to drop next week, after two consecutive weeks of increases, amid renewed concerns over a global supply glut in the worldwide oil market, market sources said Friday.

"We have to see the market and I think by the end of June, in July we will see that the action we have taken has a big impact", TASS quoted him as saying.

"Now that U.S. President Trump has announced that the U.S. will be withdrawing from the Paris Climate Agreement, it is expected that the U.S. will expand its oil production even more sharply", said analysts at German bank Commerzbank.

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Crude stockpiles were down to 6.4 million barrels in the week to May 26, beating analyst expectations for a decrease of 2.5 million barrels.

US crude production has also continued to increase, rising to 9.34 million bbl/d, up almost 500,000 bbl/d from a year-ago.

On Friday, the head of Russia's state-controlled Rosneft oil giant said that that a rise in shale oil output in the US would likely offset the effect from the OPEC and Russian production cuts.

Oil markets rose more than 1 percent on Monday, pushed up by tensions in the Middle East where top crude exporter Saudi Arabia and other Arab states cut off ties with Qatar, and as signs of falling OPEC supplies tightened the market.

The US oil rig count climbed by 11 to 733 rigs, the highest level since April 2015, according to data published on Friday by Baker Hughes Inc.

A survey by Reuters found that oil output from the Organization of the Petroleum Exporting Countries (OPEC) increased last month.

"Too early to say when production caps could be imposed on Libya and Nigeria, they have a lot of issues to solve", he told Reuters. That has kept prices under pressure, rather than raising them, as OPEC hoped.

Both Moscow and Riyadh said cooperation would continue beyond the current agreement as both countries were still trying to find ways to co-exist with United States shale oil producers, which are not part of the global output reduction deal.

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