Brent premium over WTI hits new 3-year high

Future Shock

Future Shock

Russia's largest oil producer Rosneft has been able to recover its oil production of 70,000 barrels per day (bpd) in just two days, as it tested the possibility of global output curbs easing, Renaissance Capital wrote in a client note.

With news from the Energy Information Administration that US crude production earned a new monthly record by jumping 215,000 barrels per day (bpd) to 10.47 million bpd in March, West Texas Intermediate fell 3 percent on the week, making this the second week of declines for the benchmark. Traders are trying to understand the divergence between two benchmarks, WTI and Brent, as the United States oil ended day in red after post-data fall while Brent recovered most of losses and closed positively on Thursday.

West Texas Intermediate futures are down 2.1 per cent this week as pipeline bottlenecks in the Permian Basin add to pressure from unprecedented levels of USA production.

However, the American Petroleum Institute (API) on Wednesday reported surprise buildup of 1.0 million barrels of US crude oil inventories in the same week.

On Thursday, the premium for Brent over WTI surpassed US$11 a barrel, the largest since early 2015.

Futures in NY fell 1.8 percent, set for the first monthly drop since February.

Crude oil futures were lower Friday morning even after the government said U.S. oil inventories dropped 4.6 million barrels last week. In March it jumped by 215,000 barrels a day to 10.47-million barrels a day, a new monthly record, the Energy Information Administration (EIA) said on Thursday.

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"The big thing is the increasing spread between Brent and WTI".

U.S. crude production has been rising to record-high levels since late past year.

West Texas Intermediate shed 1.09% to $66.39 per barrel at 9:30 a.m. ET.

Kuwait, Saudi Arabia and the UAE are among the few OPEC members who could raise output quickly, but the ministers were tight-lipped and would not confirm if they had discussed possible increases to production.

The statement added that the ministers also emphasised the need for healthy market conditions that stimulate adequate investments in the energy sector, in order to ensure stable oil supplies are made available in a timely manner to meet growing demand and offset declines in some parts of the world. The U.S. accounted for more than half of that decline, as U.S. crude oil and other liquids inventories decreased by 162 MMBbl over that period.

Saudi Arabia and Russian Federation said last week that they are considering boosting production to ease potential supply disruptions in Iran and Venezuela.

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