Oil edges up
Oil prices edged higher on Thursday despite swelling US crude inventories and record weekly US production, as focus shifted back to Opec supply cuts and the potential of new US sanctions against Iran.
Brent crude oil futures were at $73.56 per barrel at 0947 GMT, up 20 cents from their last close. US West Texas Intermediate (WTI) crude futures were 25 cents higher at $68.18 per barrel. Prices were pulled down in earlier trading by a Wednesday report from the US Energy Information Administration (EIA) showing a 6.2-million-barrel jump in US crude inventories C-STK-T-EIA.
But by European trading hours, the focus shifted to bullish factors, such as an increase in Saudi Arabia's official selling price of its oil to Asia, according to Commerzbank analyst Carsten Fritsch.
“It may signal stronger-than-expected demand in Asia,” Fritsch said. “This, combined with constraints in (Opec) production, could lead to higher prices.”
State-owned producer Saudi Aramco on Wednesday raised the June price for its Arab Light grade for Asian customers to a premium of $1.90 a barrel to the Oman/Dubai average, the highest since August 2014. Additionally, the latest Reuters survey of Opec production showed it pumped around 32 million barrels per day (bpd) in April, slightly below its target of 32.5 million bpd, due largely to plunging output in Venezuela. Fritsch said the cuts, along with demand growth, were more than offsetting the increase in US oil.
US oil production rose to a record of 10.62 million bpd, putting it ahead of Saudi Arabia, the biggest Opec producer.
Only Russia pumps more, at around 11 million bpd.
US drilling for new production is also increasing, encouraged by rising prices following Opec's production curbs.
But the May 12 deadline for US President Donald Trump to decide whether to continue waiving US sanctions against Iran was also buffeting downward pressure on prices.
“Overall, we continue to trade a waiting game for the US decision on Iran, waiting to have sanction headlines trigger some frenzied buying,” said Olivier Jakob, managing director of energy consultancy PetroMatrix.
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