MARKETS: OIL FALLS AFTER UPTICK IN U.S. PRODUCTION
The oil market can’t stick its landing. Crude-oil prices fell on Friday morning, breaking a brief stretch of optimism that fueled a rally on Thursday.
Brent crude, the global oil benchmark, fell 2.2% to $47.04 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 2.5% at $44.37 a barrel.
Oil investors focused on Friday on rising U.S. production, which has kept global oil supplies brimming even after the 14-nation cartel, the Organization of the Petroleum Exporting Countries, and other big producers like Russia cut output to raise prices.
U.S. production increased to nearly 9.34 million barrels per day last week, from 9.25 million barrels per day the week before, according to a report on Thursday from the U.S. Energy Information Administration. Production was up nearly 11% from a year ago and nearly back at its 10-month high.
That same EIA report sent oil prices rising on Thursday, when it showed that U.S. crude-oil storage levels — a proxy for the oversupply – fell by 6.3 million barrels in the week ended June 30.
“The rally … maybe it was a step too far,” said Warren Patterson, commodities strategist at ING Bank.
CHINA GUZZLES U.S. OIL
Fresh Chinese customs data showed China imported roughly 100,000 barrels of oil a day from the U.S. in the first five months of this year, reports Brian Speegle.
The surprise uptick in Chinese consumption of U.S. crude—10 times that of the average in 2016—has been a boon for American producers who have struggled to stay profitable amid a three-year price slump.
China could ultimately pay “well above” $1 billion this year for U.S. oil, compared with just $150 million last year, Mr. Speegle noted.
ARAMCO PRODUCTION HIT ALL-TIME HIGH
Saudi Arabian Oil Co., known as Aramco, said Thursday it produced an average of 10.5 million barrels a day of crude oil in 2016, reports Summer Said.
The flood of oil from Aramco—its highest output ever—contributed to the plunge in global prices last year. But the move was part of the state-owned company’s strategy ahead of a planned partial initial public offering, set for 2018.
“The high output reflects Saudi Arabia’s focus last year on building and defending market share, a strategy it has pulled back from,” Ms. Said wrote.
SHIPS TRANSPORTING IRANIAN OIL GO DARK
Ships carrying nearly a fifth of Iranian oil exports during the second half of last year went dark by either turning off their radio-tracking systems or withholding information about their cargo, report Sarah McFarlane and Benoit Faucon.
The revelation, based on analysis of ships transporting oil from Iran to the United Arab Emirates, is a “red flag” that Iran could be trying to evade international sanctions, Ms. McFarlane and Mr. Faucon report.
A U.S. official told the reporters that the government is “analyzing ship movements in the Persian Gulf for any attempts to circumvent bans on funding Iran’s weapons programs or clearing payments for Iranian oil through the U.S. financial system.”