Sales of stored oil up
LONDON, February 24, 2017 – Oil prices fell slightly on Friday on news that US stocks had grown by 564,000 barrels in the week ending February 17, even as hopeful signs emerged of the priciest reservoirs starting to drain.
Though analysts cited by Reuters had expected a much more significant increase of US crude stocks, at about 3.5 million barrels, Brent crude futures for April were down about a percent to USD 56.11 per barrel in early afternoon trade in London.
“Prices continue to retreat on repeated failure to rise above the upper end of their trading ranges and yesterday’s inventory data also weighs,” Carsten Fritsch, an analyst at Commerzbank, told Reuters.
Yet with prices in the USD 50s per barrel, many traders have begun emptying their priciest storing options, both in the US and in tankers off of Malaysia, Singapore and Indonesia, two separate Reuters reports indicated.
“Right now, traders aren’t incentivized [to store],” Sandy Fielden, the director of oil and products research at Morningstar, was quoted by Reuters.
“It won’t all stampede out of the gate, but inventory levels will come down. What will happen is that some of it will go to refineries, but a fair amount will be exported too.”
Though many observers expect a tense cat-and-mouse game between OPEC and US shale players over the price of oil this year, the news suggests that global production cuts implemented early last month may be starting to have an effect on the market.