Other analysts predict the Kuwait strike will be short-lived but warned that prices will be pressured again as the market refocuses on the failure of Organization of the Petroleum Exporting Countries members and some non-members to freeze output.
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The impending expiry of the front-month May contract in USA crude’s West Texas Intermediate futures also weighed, as it traded at a discount of around $1.50 to the June contract that would become the market’s benchmark from Thursday.
The U.S. Energy Information Administration early Wednesday reported (http://www.marketwatch.com/story/oil-pares-loss-after-eia-reports-us-crude-supplies-up-21-million-barrels-2016-04-20) a 2.1 million-barrel climb in crude-oil supplies to 538.6 million barrels for the week ended April 15. Producers had considered freezing output at January levels, though Saudi Arabia said no deal was possible without Iran, which said it won’t make any considerations until it regains its market footing.
They said they would go back to work at 0400 GMT Wednesday. “The workers reiterated in their action their role” in the economy, the union said in the statement in Arabic.
Delays at the Kuwaiti port have added to huge queues of supertankers which have formed in Iraq and China as ports struggle to cope with a global oil glut.
“In respect for the emir and in loyalty to him… we have made a decision to cancel the total strike”, an official statement by the union said, according to a report by Gulf News.
The workers had been protesting planned cuts to wages and benefits. On Tuesday, they settled up $1.12, or 2.6 per cent, at $44.03 a barrel.
In an interview with Kuwaiti TV channel al-Rai, Kuwait’s acting oil minister, Anas al-Saleh, said production would continue and that no talks would proceed during a strike.
The market is also awaiting data from industry group American Petroleum Institute (API) at 4:30 p.m. Eastern time, expected to show a rise in US crude oil inventories last week.
That is little more than half of Kuwait’s average output of 2.8 million bpd in March.
A gradual return to normal production of 3.0 million bpd “would take around three days”, he said. For another thing, oil workers are now out on strike in Kuwait, with the effect that Kuwaiti oil production at present amounts to merely 1.1 million barrels per day.
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The data came days after a meeting on the oversupplied market between OPEC and non-OPEC producers, including Russian Federation but not the United States, failed to produce an agreement on capping production.
