Oil slips as US stocks rise, but OPEC can cut reserves to avoid over-supply

SINGAPORE (Reuters) – Oil prices fell on Thursday after US crude oil inventories reached their highest level since December 2017, as worries over an emerging global glut is expected, although the potential for oil prices is still high. A reduction in supply by OPEC prevents further declines.

WTI (West Texas Intermediate) futures in the United States stood at $ 54.35 per barrel at 0534 GMT, or 28 cents, down 0.5% from their latest settlement.

Brent crude futures in the first month were $ 63.25 a barrel, down 23 cents or 0.4%.

Commercial stocks of crude oil in the United States rose 4.9 million barrels to 446.91 million barrels last week, the Energy Information Administration (EIA) reported on Wednesday. It was the highest level since last December.

US crude oil production remained at a record 11.7 million barrels per day (bpd), the EIA said.

"US inventory data … continued to show significant increases in supply, which relies on continued production of crude oil in the United States," he said. Stephen Innes, Asia-Pacific Trade Manager at Oanda, a futures broker.

Some analysts have warned that, despite high global output, oil markets have little spare capacity to deal with unforeseen supply disruptions.

However, Innes said that once bottlenecks in US pipelines are eliminated, he expects, in his view, by 2019, "the whole notion of a strong reserve capacity argument. world disappears.

A large number of US and Canadian oil are struggling to come on the market, as production has grown faster than pipeline extensions to handle crude shipment.

As a result, the Canadian federal government is considering a proposal from its main oil-producing province, Alberta, to share the cost of purchasing rail cars to move the region's oil to refineries in the United States.

Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC), dominated by the Middle East, is worried about the emergence of an overabundance of supply likely to lower prices.

To remedy this, the producer group plans to reduce its availability at its next meeting on December 6, although some members, such as Iran, should resist any voluntary reduction.

"Even if it is mentioned that OPEC and Russia could again accept a reduction in production, the problem is that not all parties will be able to reach an agreement," said William O 'Loughlin, Investment Analyst at Rivkin Securities in Australia.

"Saudi Arabia has hinted at a unilateral cut, but it will want to be careful not to bother the United States as President Trump has expressed his desire to lower oil prices," he added.

Trump on Wednesday congratulated Saudi Arabia for the recent oil prices and called for lower prices.

"Oil prices are down. Awesome! Like a big tax break for America and the world. Enjoy it! … Thanks to Saudi Arabia, but let's go lower! ", Tweeted Trump.