business
US crude rises after domestic oil output falls for sixth week
While US crude inventories rise to a new record, output falls for the sixth straight week with further cuts possible in the coming months. – AFP file pic, March 4, 2016. US crude futures rose in early Asian trade today, buoyed by renewed optimism prices may have bottomed out after official data showed US oil production fell to its lowest level since November 2014.
US crude futures had climbed 11 cents to US$34.68 (RM143.11) a barrel, after settling down 9 cents in the previous session.
Oil prices are stable with the decline in US production providing support, said ANZ today.
While US crude inventories rose to a new record of 517.98 million barrels last week, output fell for the sixth straight week to 9.08 million barrels a day, according to data from the US Department of Energy's Energy Information Administration.
Further cuts in US output are possible in the coming months.
"The tight credit market will make it difficult for US shale producers to refinance upcoming debt and we may see an accelerated decline in US oil production in 2016 to 2017," ANZ said.
That came as Credit Suisse said in a report that oil prices could hit US$50 a barrel in May.
The decline in US production will fuel a 1.5-percent drop in oil supply by non-members of oil producers' cartel Opec this year, the first year of non-opec negative supply growth since 2008, Paul Bloxham, chief Australia economist at HSBC said in a report today.
Non-opec supply is forecast to fall by 850,000 barrels a day this year of which 760,000 barrels will be cut from US production.
"We currently assume US tight oil production troughs in the first half of 2017 and recovers thereafter in line with our assumption of improving prices," Bloxham said in the report.
HSBC, which kept its price forecasts unchanged, assumed an average Brent price of US$45 a barrel this year, rising to US$60 in 2017 and US$75 thereafter.
Demand is forecast to grow by 1 million barrels a day, equivalent to a 1.1-percent rise, this year, but "well below consensus from the major forecasting agencies", Bloxham added.
Contracting non-opec supply and still-healthy demand growth should lead to a tightening of around 1.5 million barrels a day this year but this will not be sufficient to completely clear the 2 million barrels a day of oversupply, Bloxham said. – Reuters, March 4, 2016.
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