Spot Cargo Markets - Opec Cuts Falter

摘要

Oil prices fell back last week as concerns about rising US crude tanks overshadowed Opec output cuts. Early sound- ings suggest Opec compliance with the 1.2 million barrel per day cut pledged for the first half of 2017 was still a respectable 84% in February, despite adherence of 94% in January. International benchmark Brent closed at $55.08 per barrel Thursday, down $1.50/bbl on the week, while US domestic price-pin WTI lost $1.84/bbl to close at $52.61/bbl. Opec output restraint could improve in the next four months as the group’s biggest laggards - the United Arab Emirates and Iraq - pledge to catch up quickly with their targets. Non-Opec Russian crude production was unchanged at 11.1 million b/d in February however, with cuts of 100,000 b/d only a third of the levels pledged by Moscow. Rising US shale oil production con- tinues to fill up domestic tanks, which rose 1.3 million barrels to 520.2 million bbl in the week ending Feb. 24, according to Energy Information Administration data. US crude tanks are 33.5 million bbl higher than this time last year although investment bank Citi says they are bound to “top out” shortly with US refineries returning from maintenance. Data from the US Energy Information Administration show that domestic output recently topped 9 million b/d for the first time since early 2016. While the Nov. 30 Opec/non-Opec agreement to reduce pro- duction initially prompted oil prices to rise by $10/bbl, they have traded in a narrow $3/bbl range in recent weeks. Slack adherence with the group’s 1.2 million b/d commitments would keep inventories at record highs, and risks unraveling the 1 bil- lion bbl of speculative capital in the market and spurring a crash in oil prices. Speculative capital has roughly half a billion bbl each in Brent and WTI.