Oil prices extend losses despite surprise drop in USA inventories

Oil prices extend losses despite surprise drop in USA inventories

Oil prices extend losses despite surprise drop in USA inventories

Brent oil hit a 2019 high above $72 a barrel on Wednesday, propelled by steady economic growth in China and a fall in USA crude stocks which defied expectations and signalled firm demand, while global supply remained tight.

Brent crude, the global benchmark, was down 12 cents at 71.06 dollars a barrel at 0801 GMT. Brent closed up 1 percent on Friday when prices hit a high of $71.87 a barrel, the highest since November 12.

After slumping to a fresh daily low of below $64 in the early NA session, the barrel of West Texas Intermediate staged a modest rebound following the Energy Information Administration's weekly crude oil stock data but struggled to preserve its momentum.

The steady demand growth in China is occurring as a deal between the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russian Federation, to limit their output by 1.2 million bpd in 2019 has curtailed global supplies. They will decide in June whether to continue the arrangement.

Siluanov is concerned on losing market share, 'which is being occupied by the Americans'.

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OPEC's de facto leader, Saudi Arabia, is considered keen to keep cutting, but sources within the group said it could raise output from July if disruptions continue elsewhere.

China's economy grew by 6.4 per cent in the first quarter, official data showed, defying expectations for a further slowdown and assuaging global markets as a US-China trade deal also appears near. "Gasoline production decreased last week, averaging 9.9 million barrels per day".

Oil hit highs of more than $80 a barrel last October, but plunged to $50 a barrel by Christmas amid burgeoning USA supplies.

Surging U.S. production has filled some of the gap in supplies, although not all of the lost production can be immediately replaced by U.S. shale oil due to refinery configurations.

Crude oil supply has also declined in 2019 as the United States an imposed economic sanctions on OPEC members Venezuela and Iran.

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