Published: Sat, June 30, 2018
Money | By Arnold Ball

U.S. Oil Prices Rise as Stockpiles Fall

U.S. Oil Prices Rise as Stockpiles Fall

But the US request and a Trump tweet in April that blamed OPEC for high oil prices has caused a split within the oil group, with some members accusing Saudi Arabia of being too eager to do Trump's bidding.

"I think we'll come to an agreement that satisfies most importantly the market".

"Statements by several parties suggest that action in terms of higher supply could be on the way", said the IEA, which represents the USA and other oil-consuming nations.

The loss was buffered somewhat by sentiment from RBC Capital Markets that members of the Organization of Petroleum Exporting Countries will agree to put more oil on the market to offset supply issues expected in the second half of the year.

The International Energy Agency - which advises consuming nations - said earlier Wednesday that output from Iran and Venezuela could drop by 1.5 million barrels a day, or nearly 30 percent, by the end of next year because of us sanctions and economic upheaval.

Brent and WTI hit 3-1/2-year highs in May but have since drifted lower, indicating investors expect the market to soon become better supplied as USA crude production rises and as OPEC and its allies look poised to increase output. Saudi Arabia, Iran's rival and OPEC's largest producer, and Russian Federation, the world's largest producer and a party to the deal, have already increased supply. Saudi Arabia, in the end, unilaterally raised output.

Trump's complaints about OPEC come amid expectations of a more costly USA summer driving season.

On Wednesday, the national average for a gallon of regular stood at $2.91, up 25 per cent from a year ago, according to the AAA auto club.

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"Prices will be above $150 in less than two years", he tweeted.

According to secondary sources, total OPEC crude oil production averaged 31.87 million bpd in May, an increase of 35,000 bpd from the previous month.

All the nations would proportionally share out a 1.8 MMbpd increase to their output limit starting as soon as July, the person said, asking not to be identified because the information isn't public. "And that really caused the euro to take a dip and the (U.S.) dollar to go up, which is putting downward pressure on prices", said Phil Flynn, analyst at Price Futures Group in Chicago.

Brent crude futures, the global benchmark for oil prices, were at $75.49 per barrel at 0005 GMT, down 39 cents, or 0.5 percent, from the last close.

But uncertainty "warrants close monitoring of the factors impacting both world oil demand and non-OPEC supply that will shape the outlook of the oil market going forward", the report said.

In the United States, the American Petroleum Institute (API) reported on Tuesday that crude oil inventories rose by 830,000 barrels in the week to June 8, to 433.7 million.

As the output cuts are bigger than intended, the producers would only need to announce full compliance with their overall target to advertise that supplies will rise.

With demand for oil strong, Morgan Stanley said the group's "production is likely to creep higher".

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