Oil steady as Iraqi exports up, offsetting U.S. inventories drop

Oil steadied at around $40 per barrel on Thursday as a surprise fall in U.S. inventories the previous day was offset by an increase in exports from Iraq, underlining global oversupply.

Brent futures were at $39.89 at 0757 GMT, up 5 cents from the last close and about 8 percent above lows reached earlier this week.

U.S. crude futures were at $37.80 per barrel, also up 5 cents from their last close.

Oil exports from Iraq’s southern ports have risen to an average of 3.494 million barrels per day (bpd) in April, an official from the state-run South Oil Company said on Thursday. This was above the 3.286 million bpd average for March.

U.S. crude inventories fell 4.9 million barrels in the week to April 1, compared with analysts’ expectations for an increase of 3.2 million barrels, according to data from the Energy Information Administration on Wednesday.

“We are in the aftermath of yesterday’s (EIA) data, but if you zoom out there’s still oversupply and record inventories,” said Hans van Cleef, senior energy economist at ABN Amro in Amsterdam.

“Production numbers from places like Iran and Iraq are in focus with people looking to see how it translates into the overall supply picture.”

In Europe, North Sea oil field maintenance expected next month lent support to Brent futures, which are priced off North Sea supplies.

The over 4 percent slide in the dollar .DXY since the beginning of the year is also supporting oil, traders said, as it makes imports of dollar-denominated fuels cheaper for countries using other currencies, boosting demand.

A planned meeting of major oil producers on April 17 to freeze output around current levels, which in most cases remains at or near record highs, would do little to reduce an overhang in production with at least 1 million barrels of crude pumped every day in excess of demand.

Goldman Sachs (GS.N) said it was “less willing to believe in a sustained OPEC production freeze or cut” and instead expected OPEC’s production to rise by 600,000 barrels per day (bpd) this year and by 500,000 bpd in 2017.

As a result of this, and also production data from the United States, Goldman said it was “somewhere between in line and modestly bearish for prices … (and that) $35 per barrel WTI is not too high and not too low but just right.”