Oil edges up, breaking
six-day stretch of losses
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[April 25, 2017]
By Amanda Cooper
(Reuters) - Oil prices nudged higher on Tuesday, breaking a six-day
streak of price falls, but doubts about OPEC's ability to reduce global
crude inventories capped gains.
Brent crude was up 8 cents at $51.68 a barrel by 1145 GMT, while
U.S. crude futures were up 4 cents at $49.27 a barrel.
Brent is down 10 percent since late 2016, despite efforts led by the
Organization of the Petroleum Exporting Countries and Russia to cut
output by 1.8 million barrels per day (bpd) in the first half of 2017.
With oil supplies still around record highs, Stephen Schork of the
Schork report said on Tuesday that "OPEC has failed miserably in its
endeavor to balance the oil market".
JPMorgan said in a market note "it is evident that ... crude markets are
still struggling to clear (oversupply)". The bank said it was closing
its "August Brent long position at a loss."
To reduce the supply overhang, JPMorgan said OPEC "will be forced to
renew, and possibly deepen the agreement if they wish to keep prices
much above $50 per barrel".
Russia said at the weekend its oil output could climb to the highest
rate in 30 years if OPEC and non-OPEC producers do not extend their
supply reduction deal beyond June 30.
Extreme weakness in physical crude, where prices in the North Sea market
have fallen to their lowest this year, is also acting as a drag on
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A pump jack and pipes are seen on an oil field near Bakersfield on a
foggy day, California January 18, 2015. REUTERS/Lucy Nicholson
one analyst said crude demand could pick up and the long-awaited draw in global
inventories could start to show with refinery maintenance around Europe and
Russia set to peak in May at an estimated 1.5 million bpd.
"If you look at the last six weeks, when you include the U.S., Europe, Singapore
and floating storage, (inventories) have been going down on average by 8 million
barrels a week," SEB commodities strategist Bjarne Schieldrop said.
If that pace continued, he said it would equate to a draw down of 250 million to
300 million barrels by the end of 2017.
"With refineries out, you have a lot of crude oil sloshing around, creating
weakness in the spot price," he said. "We still have the OPEC meeting ahead of
us on May 25 and it's always uncertain. But it doesn’t make sense to sell down
to $45 ahead of that."
(Additional reporting by Henning Gloystein in Singapore; Editing by Dale Hudson
and Edmund Blair)
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