U.S. crude oil exports reach record-high

By Grant Smith on 10/5/2017

LONDON (Bloomberg) -- Oil traded near $50/bbl in New York as traders weighed a flood of U.S. crude exports against the possibility of extended production cuts by OPEC and Russia.

Futures were little changed after settling at a two-week low on Wednesday. Overseas shipments from the U.S. jumped to a record last week as  production rose, government data showed. In Russia, President Vladimir Putin said he’s open to prolonging a deal with OPEC to curb supplies, though a decision won’t be made until the current agreement nears expiry in March. Saudi King Salman bin Abdulaziz began a four-day visit to the nation on Wednesday.

Though a rally in September helped propel oil into a bull market, prices have slipped back amid concern the market remains oversupplied despite cutbacks by OPEC and its allies including Russia. A possible extension of the deal “should be at least until the end of 2018,” Putin said in Moscow.

“U.S. production is almost at a record-high level, and exports are record-high,” said Michael Poulsen, an analyst at Global Risk Management. “As this U.S. production is a fundamental part of the oil market, such news weighs heavily.”

WTI for November delivery fell $0.04 to $49.94/bbl. Total volume traded was 35% below the 100-day average. Prices fell $0.44, or 0.9%, to $49.98 on Wednesday.

Brent for December settlement gained $0.24 to $56.04/bbl on the Europe exchange, after declining $0.20 on Wednesday. Brent traded at a premium of $5.74 to December WTI.

Lower demand from U.S. Gulf Coast refiners that are still recovering from Hurricane Harvey in August has caused crude sellers to seek markets abroad, triggering shipments of 1.98 MMbpd, the highest level in weekly government data compiled since 1993. The figure was about a third higher than the previous record, set the prior week.

Traders are again bracing as a tropical depression that could grow into a hurricane is forecast to strike the Gulf Coast late Sunday, potentially forcing offshore oil and natural-gas rigs to shut.

King Salman of Saudi Arabia, OPEC’s biggest producer, is due to meet Putin on Thursday. The Russian president’s comments on Wednesday about the oil-cuts deal are the strongest signal yet that the Kremlin is willing to redouble efforts to raise global energy prices. OPEC Secretary-General Mohammad Barkindo called them a “very strong endorsement” of the accord.

Oil Market News

Russia’s cooperation with OPEC has “breathed life” back into the organization, Saudi Arabia’s Energy Minister Khalid al-Falih said in Moscow. The kingdom’s plan for an initial public offering of state-owned Saudi Aramco is on track for the second half of next year, Al-Falih said.

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