Oil retreats on stronger dollar, USA crude discount wider

Comex Gold

Iran's light crude oil price rose 43 cents in the week ended on May 25, to continue its upward trend for third consecutive weeks.

For the week, WTI is on track for a 1.5% fall, adding to last week's almost 5% decline, while Brent is set to rise 1.3%, widening the spread between the two benchmarks.

By the end of April 2018, both OECD and US inventory levels were lower than the averages for April 2013-April 2017.

Hedge funds and other money managers cut their bullish wagers on US crude futures and options during the week to May 20.

The American petroleum Institute (API) on Wednesday reported that the volume of oil reserves in the USA last week rose 1 million barrels and distillates by 1.5 million barrels, while gasoline inventories decreased by 1.7 million barrels.

Oil prices retreated on Friday after strengthening early in the session as U.S. President Donald Trump's remarks on trade led the dollar to strengthen against other currencies, weakening greenback-denominated commodities including crude.

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

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On a weekly basis, it rose to 10.8 million bpd last week, coming close to matching that of top producer Russian Federation, the EIA also said on Thursday.

The pricing of WTI and Brent suggest that US crude is now so cheap compared to its main competitor that refiners across the world, but especially in the main consuming region of Asia, should be snapping up vast quantities. It has doubled in less than a month, as a lack of pipeline capacity in the United States has trapped a lot of output inland. With gasoline demand expected to increase, we could see a fall in USA crude oil inventories, however, shale oil output is going to continue to grow.

During the said week, Organization of Petroleum Exporting Countries (OPEC)'s basket price stood at $76.41 per barrel with 65 cents increase compared to the preceding week.

The price increase was mainly due to the production cut by the Organisation of the Petroleum Exporting Countries, OPEC, and its partners.

According to the latest available figures by OPEC's secondary sources-the ones that OPEC uses to measure quotas and compliance with the deal, OPEC's production in April increased by 12,000 bpd over March, to average 31.93 million bpd, as Saudi Arabia boosted its production by 46,500 bpd.

Russia's largest oil producer Rosneft says it will be able to restore 70,000 barrels per day (bpd) of oil output in just two days if global production limits are lifted.

There were 197 gas-seeking rigs and two miscellaneous rigs, creating a total rig count of 1,060, up 144 from this time a year ago, the highest count since March 2015.

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