Crude oil futures lower in anticipation of U.S. stock build

Reuters: Oil hits nearly three-week high as Saudi Arabia to keep output well below cap

Hedge funds and money managers upped their bullish wagers on USA crude oil for the first time in four weeks, data showed on Friday.

"Robust oil production in the USA will continue to cap price gains", said Abhishek Kumar, senior energy analyst at Interfax Energy's Global Gas Analytics in London.

The oil prices turned down on Tuesday, due to fears that rising U.S. oil production will overshadow greater demand and confidence in OPEC and its allies' ability to curb supply.

West Texas Intermediate for April delivery added 25 cents to $63.80 a barrel on the New York Mercantile Exchange as of 1:09 p.m.in Singapore.

Crude rose for a second week as U.S. supplies drain and a key Libya oil field was shut.

But while the Brent-WTI spread jumped over $7 per barrel between September and December, it has sharply narrowed more recently.

Now the U.S.is on track to dethrone in the coming months the world's current leader in oil production: Russian Federation.

Prices did draw some support from Saudi Arabian oil minister Khalid al-Falih, who on Saturday said the country's crude production in January-March would be well below output caps, with exports averaging less than 7 million barrels per day.

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Soaring U.S. production, which has risen by a fifth since mid-2016, has kept a lid on oil prices this year, even as OPEC has maintained its supply cuts.

Still, OPEC and its allies seem unfazed by US shale and continue to send messages to the market that they will do "whatever it takes" to balance the oil inventories and that production cuts are here to stay until the end of 2018.

The Organization of the Petroleum Exporting Countries and other producers including Russian Federation have cut output to support prices.

Most of the drawdown has come from the liquidation of bullish long positions rather than the establishment of new bearish short ones and it has been proportionately greater in fuels rather than crude.

Just a few years ago, hardly anyone expected that that the USA would be competing with the world's top oil producers for the number 1 spot.

A Bloomberg survey showed United States crude inventories probably increased by three million barrels last week.

Consider this: in January 2017, USA crude oil production mounted to 8.82 million barrels per day.

Dear reader, I have mentioned this before, and I will say it again: there's too much oil and not enough matches. The country is set to become an oil exporter for the first time in 14 years, with the oil output in the country set to hit one million barrels per day.

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