Oil Prices Drop 5% & OPEC Doesn't Increase Output Cuts

That rebound has overshadowed efforts by OPEC and non-OPEC members like Russian Federation to support the oil market.

Renewed fears about the oil supply glut have sent crude prices plunging 14.5 percent from their peak in mid-April to below $46 a barrel on Thursday. In turn, non-OPEC producers agreed to slash their output by 558,000 barrels a day.

US crude oil inventories hit a record high of 535 million barrels as recently as the end of March.

Stocks fell across the Asia Pacific region for the third day running thanks to a 5% drop in the oil price on concerns of a supply glut.

"The two ministers expressed their satisfaction with the market fundamentals evidenced by the gradual drawdown of global inventories and agreed on the need to continue working with all participants to guide oil markets towards rebalancing", he said. "We continue waiting for this slow-motion, nearly glacial rebalancing of crude". "There are other factors, in particular, a slow reduction in oil stocks or the spring fix at refineries".

However, Grisanti and survey respondents with a more constructive view on oil suggested USA production may be closing in on a near-term peak.

Among the region's main indexes Hong Kong fell one per cent in the afternoon, Shanghai ended 0.8 per cent lower and Sydney slipped 0.7 per cent while Singapore retreated 0.2 per cent. Taipei and Jakarta also suffered losses.

The dollar and USA government bond yields US10YT=RR had both been nudged lower by the commodity market worries.

While news of OPEC's cuts drove prices in early January to the highest since July 2015, that increase encouraged US drillers to pump more. Permian output has been so great that some forecasters now believe USA output could soar to a new record by 2018.

"There's disappointment that the production cuts we've seen from OPEC and others has not had any impact at this stage on global inventory levels", said Ric Spooner, a chief market analyst at CMC Markets in Sydney.

Silencing critics who predicted OPEC would cheat its own quotas, the cartel has shown considerable restraint this time around by overwhelmingly complying with its supply cut agreement. OPEC member nations are to discuss the deal later this month.

"US production will grow, though likely not as strongly as many people are expecting".

Another driver for the weakness in the oil markets has been disappointing appetite from the USA for gasoline.

Ahead of the jobs report the dollar index, a measure of the United States currency against a basket of global peers, is down 0.1 per cent at 98.75.

The decline is being driven by expanding US output before OPEC is set to decide whether to prolong its cuts. A gallon of gas goes for an average of $2.37 today, compared with below $2 in March 2016, according to AAA. However, reports that gasoline demand slipped 2.7% over the last four weeks, compared to the same period a year ago was viewed as a negative. "Perhaps that was a one-off", said Kloza. "That adds up", Kloza said. OPEC will also meet the non-OPEC countries in Vienna on May 25.

HONG KONG (AP) — Energy shares led declines on Asian stock markets Friday after oil prices fell to their lowest levels in almost six months on oversupply concerns. "Experts say that the agreement can be extended for the first half of next year, or even the whole of 2018, to keep prices in the range of $50-60 per barrel", Sberbank CIB analyst warned.

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