Singapore: Oil fell to below $82 on Thursday on expectations for Opec to keep pumping above quotas in the second quarter, pulling prices down from eight-week highs reached a day earlier.
Falling fuel inventories in the United States and the first few weekly gains in total demand in one-and-a-half years have bolstered the view that the market will absorb ample supplies from Opec as Chinese imports soar.
Ministers from the Organization of the Petroleum Exporting Countries meet in Vienna on 17 March to discuss production policy. Officials from member countries including Algeria, Kuwait, and Angola have said this week they do not expect a change in quotas because prices are within their desired range.
“You are going to see $75 to $85 until Opec changes their views,” said Peter McGuire, managing director of Commodity Warrants Australia in Sydney. “Given that the U.S. dollar is appreciating, they are relatively content with what they are receiving for their oil.”
US crude for April slid 45 cents to $81.64 a barrel by 8:46am, after touching $83.03 on Wednesday, the highest intra-day price since Jan. 11, when oil hit a 15-month high of $83.95. London ICE April Brent fell 41 cents to $80.07.
Opec will keep oil production targets on hold this month but could raise output later this year as the world recovers from recession, pushing up demand for fuel, a Reuters poll showed on Monday.
The group’s output climbed to a 14-month high in February, according to a Reuters survey, as producers complied with only 53% of output cuts of 4.2 million barrels per day agreed in December 2008.
Saudi Arabia, Opec’s top producer, will provide full contracted volumes to most Asian buyers in April, except for a major refiner in northeast Asia.
Output from the cartel is bloating US crude inventories. They have climbed for the past six weeks, showing a 1.4-million-barrel gain to 343 million barrels in the week to 5 March, the Energy Information Administration (EIA) said on Wednesday.
The nation’s gasoline stockpiles showed a surprise decrease of 2.9 million barrels to 229 million barrels, the EIA said. Distillate stocks, which include heating oil and diesel, fell by 2.2 million barrels to 149.6 million barrels, down for the sixth straight week.
US total oil product demand over the past four weeks was 19.41 million bpd, up 3.8% from a year ago. China’s imports of crude oil in February rose to their second-highest on record on a daily basis.