Crude futures fall after Kuwaiti oil workers end strike
Strike had cut production in OPEC member by almost two thirds
End of strike revived bearish mood brought on by failure of major producers to agree to freeze output
Crude futures fell on Wednesday after Kuwaiti oil workers ended a three-day strike that had cut the nation’s crude output by around half, with worries about an oversupplied market returning to the fore.
Concerns about an oil surplus were also reinforced by industry data that showed US stockpiles rose last week.
Brent crude futures were down 82 cents at $43.21 a barrel at 7am.
US crude was down 94, or more than 2 per cent, at $40.14, after dipping below $40 earlier.
A trade union said in a statement posted on its Twitter account on Tuesday that Kuwaiti oil and gas workers had ended the strike that had temporarily cut the OPEC member’s crude production to as little as 1.1 million barrels per day (bpd) from about 3 million bpd.
By Tuesday, though, output had recovered to around 1.5 million bpd.
The end of the strike revived the bearish mood brought on by the failure of major producers on Sunday to agree to freeze output to help overcome a market imbalance that has caused a slump in prices since mid-2014.
“We were bearish before Doha. Prices had risen too far on false hopes of a deal. Now that this has been corrected, we’re more neutral in our price outlook,” said Georgi Slavov, head of research at commodities brokerage Marex Spectron.
“Generally, we think that oil prices have passed their bottom this year, and we expect a Brent price range of $45-$55 per barrel for the mid-term,” Slavov said.
Adding to the bearish tone, data from industry group American Petroleum Institute (API) also showed US crude stocks rose more than anticipated last week.
Crude inventories rose by 3.1 million barrels in the week to April 15th to 539.5 million, compared with analysts’ expectations for a rise of 2.4 million barrels. Crude stocks at the Cushing, Oklahoma, delivery hub fell by 235,000 barrels, API said.
“In the near term we are going to see more downward pressure than upward,” said IHS analyst Victor Shum.