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Oil Traders Seem Totally Confused

By:
Barry Norman
Published: May 5, 2016, 03:09 UTC

Crude oil reversed earlier gains to end the day in the green but only by a few cents. WTI is up 7 cents at 43.70 well of its highs earlier this week.

Oil Traders Seem Totally Confused

Crude oil reversed earlier gains to end the day in the green but only by a few cents. WTI is up 7 cents at 43.70 well of its highs earlier this week. Brent oil remained in the red at 44.72 dipping 25 cents. US official crude oil inventory soared printing much higher than expected but traders paid little attention today. crude inventories increased by 2.8mln, versus analyst expectations for a 1.7mln rise, to 543.4mln barrels last week, according to government statistics. It comes after corresponding figures from the American Petroleum Institute showed a 1.3mln barrels rise in the surplus.

Brent crude has fallen more than 7 percent from a 2016 high hit on Friday in response to rising output from the Organization of the Petroleum Exporting Countries, signs of economic slowdown in the United States and Asia, and a stronger dollar.

brent oil

The Canadian province of Alberta was evacuating the entire population of Fort McMurray where a wildfire was taking hold in the heart of the country’s oil sands region, prompting some companies to cut output.

Suncor Energy, whose oil sands operations are closest to the city, said its main plant north of Fort McMurray, was safe, but it was reducing crude production in the region to allow employees and families to get to safety.

While total OPEC output rose in April, outages around the world have been supporting prices. The Canada disruption adds to supply losses in Nigeria and Iraq, concern about renewed losses in Libya and fears that Venezuela’s cash crunch could hit the OPEC member’s output. Some believe the rally has further to go in 2016 as the supply glut eases. (CNBC)

In an unusual twist UPI reported that an increase in Russian oil production and price expectations balanced against shortages in Canada sparked by wildfires, pushing oil higher early Wednesday.

brent oil

Oil exports from Russia in April increased to their highest level in more than a year, with deliveries growing by more than 6 percent for the first four months of the year. According to government-funded Russian news agency RT, exports of oil from Russia are at their highest level since January 2015.

The figures are in contrast to calls from Russia to hold production at January levels. Russia and some members of the Organization of Petroleum Exporting Countries called for a production freeze to help stabilize a depressed energy market, though talks collapsed last month on reservations from Iran.

The low price of oil had significant effects on Shell oil which released data today. Shell posted an income and earnings decrease of billions in the first quarter of 2016, mainly due to lower oil prices, the Anglo-Dutch oil and gas company announced on Thursday.

The income attributable to shareholders dropped to 421 million euros (484.07 million U.S. dollars) in the first quarter of 2016, compared to 3.854 billion euros in the same quarter one year ago, a decline of 89 percent. According to Shell this decline was impacted by the decrease in oil, gas and LNG prices and weaker refining industry conditions.

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