As OPEC nations make their biggest oil production cuts on record, Brazil, Russia and the US are pumping out more, threatening to send crude back below $ 50 a barrel as demand slows.
US imports from OPEC fell 14 % to 5.02 mm bpd in January from a year earlier, according to the latest monthly report from the Department of Energy. At the same time, imports from Brazil more than doubled to 397,000 bpd and Russia's increased almost tenfold to 157,000 bpd, a trend that continued in February and in March, according to data from each country.

While the median forecast in a survey of 32 analysts shows crude in New York averaging $ 61 a barrel in the fourth quarter, up from the second quarter's estimate of $ 50, traders are increasing bets on a decline. The fastest growing options contract on the New York Mercantile Exchange is for prices to fall below $ 40 a barrel by May 14.
"OPEC has done a good job keeping oil in the $ 50 area, but they will have to cut substantially more, maybe more than they are capable of, if they want higher prices," said John Kilduff, a senior vice-president of energy at MF Global. "You are going to hear greater calls for non-OPEC producers to co-operate and make cuts."

Imports fell by 148,000 bpd in January just as America's production increased by 153,000 bpd, according to data compiled by the Energy Department. More oil is flowing just as the slowing economy causes consumption to contract for the second consecutive year.
The US used an average of 18.9 mm bpd in the four weeks to April 3, down 4.4 % from a year earlier, according to the Energy Department, the lowest level since October. Gross domestic product would contract by 3.8 % in North America this year, the International Energy Agency said, dropping an earlier forecast for a recovery in the economy and oil demand in the second half of the year.

Inventories climbed 1.65 mm barrels in the week to April 3, the highest since July 1993, US government data show. Supplies are 12 % above the five-year average for the period and are the equivalent of 25.4 days of consumption, up from 22.1 days a year ago.
Open interest, or the number of outstanding contracts on the June put option for oil to fall to $ 40 a barrel, rose by 20 % to 24 503 contracts in the five trading days to April 9. A so-called put gives the owner the option to sell commodities at a predetermined price in the future. Bets that crude will drop to $ 45 rose by 13 %.

Source: http://www.busrep.co.za