Oil prices dropped almost 2% on Thursday following industry data suggested a crucial pipeline shutdown had not cut crude flows to the U.S. storage base by as much as anticipated. Higher Iraqi oil exports also highlighted the global oversupply situation despite an optimistic U.S government report on Wednesday on U.S. crude supply-demand that ignited prices up by 5%. Next, market intelligence firm Genscape reported an accumulation of 255,804 barrels at the Oklahoma delivery hub for United States crude futures during the week, traders who witnessed the reports stated.
The build came despite TransCanada Corp having closed since Saturday its 590,000 barrels per day (bpd) Keystone crude pipeline that moves crude to Cushing and Illinois. Genscape did add that a 481,485-barrel reduction at Cushing in the five days to Tuesday seemingly was caused by a potential leak, traders added. But that wasn’t enough to offset total inflows for the week. “I guess people were expecting even more impact from the Keystone closure,” quoted a trader.
Brent futures fell 85 cents, or 2.1 percent, at $38.99 a barrel Thursday morning. U.S. crude futures dropped by 75 cents, or 2 percent, to $37 per barrel. “We are in the aftermath of yesterday’s (EIA) data, but if you zoom out there’s still oversupply and record inventories,” stated Hans van Cleef, senior energy economist at ABN Amro. “Production numbers from places like Iran and Iraq are in focus with people looking to see how it translates into the overall supply picture.”
U.S. crude inventories slipped 4.9 million barrels in the week to April 1, in comparison with analysts’ forecasts for an hike of 3.2 million barrels, according to data from the EIA on Wednesday. Oil exports from Iraq’s southern ports have spiked to an average of 3.494 million barrels per day (bpd) in April, an official from the state-run South Oil Company contributed on Thursday. This was higher than the 3.286 million bpd average for March.