Oil falls for third day as higher inventories, dollar weigh

Reuters: Oil hits nearly three-week high as Saudi Arabia to keep output well below cap

By John Kemp LONDON Petroleumworld 02 28 2018

The market was also supported by data showing US crude stockpiles fell more than expected earlier this month.

This is coming as the International Energy Agency (IEA) has predicted that the United States would overtake Russian Federation as the world's biggest oil producer by 2019 at the latest, as the country's shale oil boom continues to upend global markets.

There is little OPEC can do about rising US-produced overseas crude oil sales without turning open the taps again.

U. S. West Texas Intermediate crude was down 37 cents, or 0.6 percent, at $62.64 by 0142 GMT, after falling 90 cents the previous session. S. crude and gasoline stockpiles, with surging production in the country hampering OPEC attempts to end a global glut.

"We're not so much anxious about inventories, but trying to see how USA domestic production and rig count numbers are coming to week by week", David Lennox, a commodities analyst at Fat Prophets in Sydney, said by phone.

The U.S. Energy Information Administration (EIA) expects in its latest Short-Term Energy Outlook that U.S. production will average 10.6 million bpd this year.

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Oil prices climbed on Monday as Saudi Arabia promised that it would continue to curb production.

Hedge funds continued to take profits on their bullish positions in crude and especially refined fuels in the most recently reported week but supportive comments from OPEC helped steady oil prices.

The spread, however, shrank in recent years after the broader oil market meltdown in 2014, combined with the inauguration of USA crude exports at the end of 2015 and into 2016.

The prices of oil remained sturdy for three consecutive weeks in Saudi Arabia. It will reassure those Americans that fear the USA is always being held to ransom by Middle East, even though the United States spends a huge amount on defending the regions' oil fields - think Desert Storm and all that.

That doesn't mean USA crude exports will necessarily fall back to the old levels before a year ago, below 1 mb/d, for example.

Just a few years ago, hardly anyone expected that that the US would be competing with the world's top oil producers for the number 1 spot.

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Fund positioning remains very stretched with longs outnumbering shorts by a ratio of nearly 10:1, but down from nearly 12:1 at the end of January.

"We need to add 15 million barrels daily by 2040 to meet demand", he added, putting the needed investment at $10.5 trillion.

The entire energy complex was led lower by gasoline futures after a surprise build in USA gasoline stocks, which rose by 2.5 million barrels, compared with expectations for a 190,000-barrel drawdown.

Arab News quoted Mazrouei as saying that cooperation between oil producers including Russian Federation had reached levels that were "more than expected".

The gap between WTI and Brent crude oils has narrowed for several reasons.

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