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London - Oil traded near the highest in almost five months after US output dropped to the lowest since October 2014 and Iraq said producers plan new output freeze talks as early as next month.
Brent in London swung between gains and losses after rising 6.7% over the previous two sessions. US crude output fell to 8.95 million barrels a day in the week ended April 15, the Energy Information Administration reported. Major of the Organisation of the Petroleum Exporting Countries (OPEC) and other crude producers will meet in Russia, possibly in May, to make another effort to agree on an output cap, Iraq’s Deputy Oil Minister Fayyad Al-Nima said.
Oil’s slump since the middle of 2014 has pushed US shale oil production to the lowest in almost 18 months. Supply disruptions in Kuwait and an explosion at an oil facility in Mexico have also countered bearish sentiments created by the failure of some of the world’s biggest producers to agree on a production freeze in Doha on Sunday, according to Michael Poulsen, an analyst at Global Risk Management.
Positive production
“The market is trying to strike a balance between the bullish news and the bearish and it’s going to keep oil prices volatile for a while,” Poulsen said by phone. “US shale oil is taking a hit, but at some point there will be a cap on prices when they come back online.”
Brent crude for June settlement swung between gains of as much as 33 cents and losses of 57 cents. It traded 3 cents up at $45.83 a barrel on the London-based ICE Europe Futures exchange local time. Prices rose $1.77, to $45.80 on Wednesday, the highest since November 25. Total volume traded was 47% above the 100-day average. The global benchmark was at a $1.59 premium to West Texas Intermediate.
WTI for June delivery was at $44.21 a barrel on the New York Mercantile Exchange, up 3 cents. The May contract, which expired on Wednesday, rose $1.55, to close at $42.63 a barrel.
Too low
Oil at $45 a barrel is still too low for US shale producers to be profitable, Faith Birol executive director of the International Energy Agency (IEA), said on Thursday. The agency doesn’t see the failure of the Doha talks delaying a market rebalance by the end of this year or 2017, he said.
Iraq sees prices rising slowly despite the failure of the Doha meeting, said Al-Nima. Venezuela isn’t as hopeful and sees oil prices touching new lows within a month, Energy Minister Eulogio del Pino said on Wednesday. Russia doubts that there will be a production freeze in the foreseeable future, Energy Minister Alexander Novak said in an interview.
Other oil-market news:
US crude inventories climbed 2.08 million barrels to 538.6 million barrels last week, the highest level since 1930, the EIA data show. A 3 million-barrel gain was projected by analysts surveyed by Bloomberg before the report. Supplies at Cushing, Oklahoma, the delivery point for WTI and the nation’s biggest oil-storage hub, dropped by 248 000 barrels.
Nigeria will push fellow OPEC members for an oil-output freeze when the group holds its next meeting in June, Petroleum Minister of State Emmanuel Kachikwu said on Wednesday. Petroleo Brasileiro SA says March oil output fell 3% from the previous month to 2.02 million barrels a day.
