Oil prices retreat after US-inspired gains

Major oil producers began talks in Qatar on Sunday to try to reach a deal on capping production to boost prices, despite Iran's absence. (AFP/Haidar Mohammed Ali)

NEW YORK: Oil prices retreated on Thursday (Apr 21) as traders banked profits from the previous session's sharp gains sparked by another decline in US crude production.

US benchmark West Texas Intermediate for delivery in June finished at US$43.18 a barrel, down an even US$1.00 from Wednesday's close. Brent North Sea crude for June delivery shed US$1.27 to US$44.53 a barrel.

"People are taking money off the table, to wait and see what happens," said analyst Carl Larry of Frost & Sullivan.

Prices surged four per cent to near five-month highs on Wednesday after the US energy department reported that US output dropped below nine million barrels a day for the second week running, more than 600,000 barrels below the peak production level in mid-2015.

High US shale production has been a key contributor to the global oversupply, along with elevated output from other producers including Saudi Arabia and Russia.

Reports that Iraq is pushing for new output talks among producers after the collapse of the Doha meeting Sunday had also provided support to crude futures on Wednesday.

The Doha meeting fell apart after kingpin Saudi Arabia pulled out owing to bitter rival Iran's refusal to impose output limits. Tehran said it was still in the process of restoring production after the removal of nuclear-linked Western sanctions in January.

"Crude oil backed off from its highest level this year after talk of a second producer meeting in May and a smaller-than-expected build in US weekly inventories gave way to profit-taking," said Jasper Lawler, analyst at trading group CMC Markets.

"Chances of another producer meeting in May seem fleeting at best. This latest effort ended in an embarrassing failure and the next OPEC meeting is in June, so it makes no sense that another one would take place" before that time, he said.