Oil dips amid signs of ample supply

Oil dips amid signs of ample supply

Oil dips amid signs of ample supply

Additionally, data from market intelligence firm Genscape showed that inventories at Cushing, Oklahoma, the delivery point for USA crude futures, fell more than 400,000 barrels in the week to May 11, according to traders who saw the data.

Crude oil prices moved up during European trading hours and continued to rise during United States trading hours.

A lower US benchmark price could make American crudes attractive in Asia. Oil and the dollar often move in opposite directions, since a stronger dollar makes oil more expensive for buyers using foreign currencies, reducing demand.

OPEC has repeatedly warned that booming USA shale production could jeopardise the delicate balance that the overall market has managed to reach.

American measures could cut the Iran's crude exports, and traders are watching whether Opec and its allies will end their agreement to curb supply and increase production instead to fill in the gap.

The bottleneck in North America likely contributed to a 4.9 million barrel rise in US crude oil inventories, to 435.6 million barrels, that the private American Petroleum Institute reported on Tuesday.

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"We're very overextended", said Donald Morton, senior vice president at Herbert J. Sims & Co.

"In these early days, there is understandable uncertainty about (the) potential impact on Iran's oil exports" from the U.S. move, it said. As both the U.S. Energy Information Administration (EIA) and OPEC have already projected, the IEA also expects U.S. production to surpass 10 million barrels a day this year.

Oil prices rose to multiyear highs on Tuesday, bolstered by signs that major oil producers are still committed to reducing supply and the rising specter of USA sanctions against Iran.

In April, Chinese crude oil imports set a new record-at 9.6 million bpd they beat the previous daily record of 9.57 million bpd from January this year.

The oil market is set to tighten further as supplies have been constrained by the earlier Vienna pact involving Saudi Arabia-led Opec along with non-Opec Russia to cut output by 1.5 million bpd, resulting in global crude inventories falling to 1 million barrels below a five-year average.

That means oil's declines may be limited. "Organisation for Economic Co-operation and Development (OECD) commercial stock levels have been adjusted from a peak of 3.12 billion barrels in July 2016 to 2.83 billion barrels in March 2018, corresponding to a drop of 300 million barrels". Diesel futures rose 0.19% to $2.2538 a gallon.

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