FOCUS-Oil prices ease again under weight of glut
By Andrew Mitchell
Monday August 17, 1:26 pm Eastern Time
LONDON, Aug 17 (Reuters) - Oil prices trudged lower on Monday, unable to shake off the grip of fundamental oversupply.
International marker Brent was trading down 17 cents at $12.27 a barrel by 1522 GMT, less than a dollar above last week's 10-year price low.
Prices are entrenched more than a third below last year's average price of $19.30 as a chronic stock surplus heads off any promise of a price revival.
Brent has barely broken above $15 all year, despite two producer deals aimed at wiping some three million barrels per day (bpd) from supply to right capsizing markets.
Saudi Arabia's decision last week to cut its crude contract sales by 18 percent, far more than its previous reductions, allayed some market scepticism that the austerity measures were being fully applied.
And producer credibility got a further lift on Monday when respected industry newsletter Middle East Economic Survey (MEES) said Iran had cut its July crude oil exports by 250,000 bpd to 2.232 million bpd.
Yet Iran's total July output, including domestic needs, was estimated at 3.580 million bpd, well above the 3.32 million bpd it pledged as part of the producer deals.
And the president of Venezuela's state oil company, Luis Guisti admitted in a newspaper interview that production has only been cut back by a net total of one million bpd.
The impact of the producer cuts has been severely dented by a rise of more than 500,000 bpd in Iraqi exports under the U.N. oil-for-food programme.
This has ballooned the world's oil stock levels to nine-year highs, although big inventory rises this time last year mean that the yearly surplus is starting to ease.
Analysts say that demand prospects are dim as Asia's financial crisis threatens growth around the globe and Russia teeters on the brink of its own economic crisis.
Some price strength could emerge from supply disruptions in China, where the country's biggest oilfield is in danger of being swamped by raging floodwaters.
A swollen reservoir is threatening to overflow and send a wall of water crashing over the northeast Daqing fields that account for one half of China's domestic oil production.
Floodwaters on the Nen river, which burst dikes protecting Daqing over the weekend, also forced nearby Jilin oilfield to close more than half of its wells, a local official said.
Prices in dollars per barrel:
Aug 17 Aug 14
(1522 GMT) (close)
IPE October Brent 12.27 12.45
NYMEX September light crude 13.12 13.35 |
