Flotilla of America crude heads to Asia as OPEC weighs extending reduction

Dhaka,  Thu,  27 July 2017
Published : 18 May 2017, 21:56:09
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Flotilla of America crude heads to Asia as OPEC weighs extending reduction

Oil falls as supply remains ample despite output cuts
HOUSTON/NEW YORK, May 18 (Reuters): Oil tankers carrying around 10 million barrels of US crude are en route to Asia, according to shipping data and trade sources, as US producers take advantage of favorable prices to ship to the region while OPEC ponders further supply cuts next week.

At least eight tankers are in transit, sources said and the shipping data in Thomson Reuters Eikon showed, with one of them carrying the first ever cargo of Southern Green Canyon crude purchased by Japanese refiner Cosmo Energy. Another contains the first Alaskan North Slope cargo to arrive in Asia in eight months.

OPEC members meet next week to discuss extending a global supply cut, but the possibility of US supply eating into their market share will be a challenge. While member countries have largely restrained their supply, they have remained intensely focused on keeping market share with Asian refiners. But relatively cheap US crude has buoyed exports to Asia.

Traders expect that May US crude exports could reach around 1 million barrels per day, with a sizable portion of that going to Asia. Last week, US crude exports touched 1.09 million bpd, the third highest on record, according to US government data. If numbers remain elevated, they could surpass the record 1.2 million bpd seen in February.

"We expect that momentum to continue when (Dakota Access Pipeline) opens and as more Permian production hits Corpus Christi docks," said Sandy Fielden, director of oil and products research at Morningstar, of the exports.

Another report from Singapore: Oil prices dipped on Thursday, weighed down by plentiful supply despite ongoing efforts led by OPEC to tighten the market by cutting production.

Brent crude was down 11 cents, or 0.2 per cent, from its last close at $52.10 per barrel at 0644 GMT.

US West Texas Intermediate (WTI) crude was down 9 cents, or 0.2 per cent, at $48.99.

The downward correction eroded gains from the previous session when prices rose on the back of a drawdown in US crude inventories and a slight dip in American production.

The US Energy Information Administration said on Wednesday that crude inventories fell 1.8 million barrels for the week to May 12, to 520.8 million barrels.

However, the drawdown was smaller than expected, and many traders say there is still more oil in the system than the market can absorb.

"The fall in stockpiles undershot the expectation of a 2.36-million draw," said Greg McKenna, chief market strategist at futures brokerage AxiTrader.

"OECD stocks were up 24.1 million barrels (in Q1 2017) due to a large build in January," BMI Research said, adding that this left the stocks 307 million barrels above their five-year average.
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