Oil prices fall, while demand for US Treasuries stays strong

Randall Padilla
March 14, 2018

"The rapidly growing USA shale production is making it virtually impossible for prices to rise", according to analysts at Commerzbank.

Oil has struggled to recover losses from last month's broader market slump after climbing over $66 a barrel in January.

Hedge funds increased bets on falling West Texas Intermediate crude prices by the most this year, according to the U.S. Commodity Futures Trading Commission.

Bijan Zanganeh, oil minister for Iran, said over the weekend that OPEC could agree in June to begin easing current oil production curbs in 2019; however, he added that working with the cartel to thwart the Americans is vital because "If the price jumps [to] around $70 .it will motivate more production in shale oil in the United States".

The reduction came as gross short positions on the New York Mercantile Exchange climbed to their highest level in almost a month.

US crude oil production C-OUT-T-EIA has risen by nearly a quarter since mid-2016 and output soared past 10 million bpd in late 2017, overtaking production by top exporter Saudi Arabia.

"Oil prices fell on the back of concerns that surging USA production. could push inventories in the USA higher", ANZ bank said on Tuesday.

Between November 2017 and February 2018, Indian crude oil imports from Venezuela averaged some 300,000 bpd, down by around 20 percent compared to the same period a year earlier, industry and shipping sources told Reuters on the condition of anonymity.

For the first time since 2014, Brent oil reached $71 per barrel, as well as WTI crude futures rising to $66.35 per barrel, the highest price mark since December 2016.

Both crude benchmarks dropped by around 1 percent on Monday after the U.S. Energy Information Administration said output from the shale basin would hit a new record high in April. The global benchmark traded at a $3.58 premium to May WTI.

The predictions and the forecasts for the oil production are looking grim at an expected 11 million barrels per day and more by the end of the year. Workers at Libya's Zawiya oil-export terminal started a strike on Monday over delayed salary payments, according to people with knowledge of the matter.

USA production is expected to rise above 11 million bpd by late 2018, taking the top spot from Russian Federation, according to the International Energy Agency (IEA). Gasoline futures in NY are down 0.2% at $1.8895 a gallon.

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