Still, some analysts think OPEC will be successful in balancing the market: File Image: Pixabay
Data released on Thursday chipped away at confidence over the Organization of the Petroleum Exporting Countries (OPEC) being able to contain a potential global oversupply of crude via its production cuts, with the result being that the two major benchmarks incurred mild price drops - however, the prices still hovered near 2019 highs, and some analysts think there is still room for further growth in the near term.
West Texas Intermediate ended Thursday's session 20 cents lower at $56.96 per barrel, while Brent fell by 13 cents to $66.95, on the strength of Energy Information Administration numbers showing that U.S. crude stocks rose 3.7 million barrels in the week to February 15, to 454.5 million barrels, the highest since October 2017, despite exports surging 1.2 million barrels per day (bpd) to a record 3.6 million bpd.
Still, while the numbers would contribute to a bearish sentiment, analysts such as Abhishek Kumar, senior energy analyst at Interfax Energy, pointed out that OPEC in general is still supportive of prices, and "Sharply declining oil output from Iran and Venezuela will further prompt bullish sentiment in the market."
Abhishek Kumar, senior energy analyst, Interfax Energy
Sharply declining oil output from Iran and Venezuela will further prompt bullish sentiment
Contributing to the cautious optimism on Thursday was Nancy Tengler, chief investment strategist at Tengler Wealth Management, told CNBC television that while she anticipates a crude market slowdown, "if we see anything coming out of China positively in terms of global growth, we're going to start to see things re-accelerate."
That said, Thursday also offered signs that some countries are determined to ramp up production for their own economic gains, which could ruin the forecasts of the experts: Vadim Yakovlev, first deputy chief executive for Russian oil producer Gazprom Neft, was quoted in a magazine published Thursday as saying his company expects its oil output to rise by 2 percent this year.
He added that Gazprom would still raise production for the year even if OPEC and its allies decide to prolong their production cutback agreement.
It should be noted that to date, Russia has achieved a mere 18 percent compliance with the OPEC cuts.
Citing a goal to reduce the country's dependence on imported crude by 10 percent by 2022, Narendra Modi, prime minister for India, on Thursday endorsed revamped rules that will give producers pricing and marketing freedom that is currently non-existent.
Also, state-owned companies Oil and Natural Gas Corp and Oil India will be allowed to induct private players to enhance production from its existing blocks and introduce new technology and capital.
As for the U.S. shale juggernaut, Kevin O'Brien, chief business officer at Orbital Insight, told Bloomberg television that inventories stateside have climbed about 3 percent in the past 30 day,s "and we're thinking there will continue to be a build up in the actual inventory, driven in part by the shale operators."