08 February, 2017
Despite production cuts out of the Organization of Petroleum Exporting Countries and other major crude exporters, oil and energy-related exchange traded funds continue to weaken as US shale oil producers pick up the slack.
Futures slipped 1.6 per cent in NY.
"The general perception is that OPEC is cutting production, which is supporting prices, but high stock levels, rising rig counts and growing US production are capping gains", Tamas Varga, analyst at London brokerage PVM Oil Associates, told Reuters. These companies' trading divisions thrived in 2015 and 2016 because an unusually strong contango - where contracts for future delivery trade higher than spot prices - made it profitable to store oil.
The latest weekly American Petroleum Institute (API) inventory data for the week ending February 3rd reported 14.23mn barrel build in inventories and the second largest build on record.
But investors remain wary of rising output from countries outside the deal, including the US, which could wipe out the gains made by OPEC's supply action.
Marathon Petroleum (MPC) Q4 Earnings, Revenue Beat Estimate February 01, 2017
The high end target price has shares touching $23 and the low end target estimate has the stock moving to $15 within the year. Today analysts at UBS Securities upgraded Marathon Petroleum's (NYSE:MPC) shares to "Buy" in a report released to investors.
USA drillers put 17 more oil rigs to work last week, according to oil-field services company Baker Hughes Inc., bringing the total to 583.
"We're coming to this reality that there's a lot of oil supply in the USA and we're heading into refining and maintenance season", said Carl Larry, director of oil and gas at Frost & Sullivan.
"We expect USA crude oil production to be about 250,000 barrels per day higher than a year ago in the second quarter", he said. Gasoline futures hit their lowest level in two months, falling 3.07 cents to $1.4796 a gallon.
Oil has fluctuated above US$50 a barrel since a deal to trim output between the Opec and 11 other nations took effect on January 1. The Energy Information Administration follows with official numbers Wednesday morning.
Away from the oil market, gold futures remained above $1,230 an ounce as safe-haven seeking investors continued to bet on the physical market.