Crude oil prices are down on Friday due to worries about progress in trade talks between the US and China and global economic slowdown.
The futures on US crude oil WTI depreciated by 0.10% to 62.04 USD per barrel. The Brent variety reported a fall of 0.24% to 69.23 USD per barrel.
According to traders, price pressures are a result of fears that economic slowdown may worsen fuel consumption.
The United States and China, the world’s biggest oil consumers, may soon reach a trade deal, although some obstacles still remain. US President Donald Trump said on Thursday that the two countries are very close to entering into a deal, although the US is still not taking a step towards removing the tariffs for goods with an annual turnover of 250 billion USD.
Meanwhile, the Brent oil is about to mark a second weekly growth, while WTI is about to send a fifth consecutive weekly gain.
Since the beginning of the year, Brent has risen by nearly 30%, while WTI has raised its price by nearly 40% thanks to production constraints and US sanctions against Iran and Venezuela. The Organization of Petroleum Exporting Countries (OPEC), along with other non-cartel countries, including Russia, agreed to cut production by 1.2 million barrels per day by early 2019 to support prices.
The consultancy company Ryds Energy said that ongoing OPEC supply constraints would support oil prices in the second half of this year and early in 2020.
There is a clear bias to the upside with the supply restrictions and there’s a much-better-than-expected demand picture after the recent China and US PMI numbers, along with a potential kicker from any Sino-American trade agreement.
US oil inventories and production
To some extent, OPEC’s efforts to support the market are undermined by an increase in US oil production, which, according to official data, has risen to a record 12.2 million barrels per day during the last week. As a result, stocks of crude oil rose last week.
The Energy Information Administration said in its regular weekly report that crude oil inventories grew by 7.24 million barrels in the week to March 29. At 449.5 million bbl, US crude oil inventories are at the 5-year average for this time of year.
That was compared to forecasts for a stockpile draw of 0.43 million barrels, after a gain of 2.80 million barrels in the previous week.
The EIA report also showed that gasoline inventories fell by 1.78 million barrels, compared to expectations for a draw of 1.54 million barrels, while distillate stockpiles dropped by 2.0 million barrels, compared to forecasts for a decline of 0.51 million.
The US refinery inputs averaged 15.8 million barrels per day for the week ended March 29, about 18,000 barrels per day more than the previous week’s average. Refineries operated at 86.4% of capacity. Gasoline production increased, averaging 9.8 million barrels per day. Distillate fuel production decreased, averaging 4.9 million barrels per day.
The US crude oil imports averaged 6.8 million barrels per day, up by 223,000 barrels per day from the previous week. Over the last 4 weeks, crude oil imports averaged 6.7 million barrels per day, 12.1% less than the same period last year. Total motor gasoline imports averaged 746,000 barrels per day. Distillate fuel imports averaged 144,000 barrels per day.