Oil rises marginally, gains Capped by High U.S. Supplies
Crude-oil futures eased early Monday amid investor concerns about excess crude in U.S. markets.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in April CLJ5, -1.10% traded at $50.65 a barrel , down 16 cents in the Globex electronic session. Brent crude for April delivery LCOJ5, -0.66% fell 5 cents to $60.17 a barrel on London’s ICE Futures exchange.
Nymex West Texas Intermediate crude declined 4.6% last week, dropping more than Brent crude, which fell 2.1%. Both benchmarks snapped a three-week winning streak.
“U.S. crude stocks are elevated and set to build through May as challenges continue to mount,” Morgan Stanley’s head of energy research Adam Longson said in a weekly report.
The U.S. crude market faces challenges including growing oil production in North America, refinery maintenance and a marginal decline in oil imports.
Although Brent crude prices are holding up better than Nymex prices, concerns over the U.S. oil market could limit gains in Brent especially with investors using U.S. data as a proxy for the global market, Longson added.
Baker Hughes data showed a further decline in the count of U.S. drilling rigs but analysts have pointed out that the rate of decline has slowed considerably.
The impact of fewer U.S. drilling rigs will only be seen later this year, BNP said. “The changes are more marked in the second half of the year, consistent with the time lag between lower drilling activity and production,” BNP said.
Over the weekend, Union workers walked out of three more U.S. refineries, including the nation’s largest fuel-making facility–the Motiva Port Arthur Refinery in Texas–expanding a nearly month-long strike.
In Libya, the country’s largest oil field at Sarir resumed operations on Sunday after a pipeline was blown up about a week ago by unknown militants, and the key oil export terminal at Zueitina in eastern Libya also restarted operations.
Meanwhile, U.S. Secretary of State John Kerry met with Iran’s foreign minister for fresh nuclear talks in Geneva, to try to agree to an outline of a final nuclear agreement by late March.
Wider financial markets kept an eye on Greece’s debt negotiations after a tentative four-month extension of its bailout package.
Nymex reformulated gasoline blendstock for March RBH5, +0.78% — the benchmark gasoline contract — rose 219 points to $1.6626 a gallon, while March diesel traded at $2.2009, 891.0001 points higher.
ICE gasoil for March changed hands at $582.75 a metric ton, up $1.25 from Friday’s settlement.
Source: MarketWatch
