Published: Mon, August 06, 2018
Money | By Arnold Ball

Russia's Novak: Higher oil production in July aimed at market stability

Russia's Novak: Higher oil production in July aimed at market stability

A mixed U.S.jobs report and data showing total OPEC production were offsetting supply-side strains and left the price of oil searching for direction early Friday.

US crude inventories rose 3.8 million barrels last week, according to data from the Energy Information Administration.

U.S. West Texas Intermediate (WTI) crude futures were at $68.87 per barrel at 0647 GMT, down 9 cents from their last settlement.

The kingdom's oil production grew by 230,000 barrels a day in July, to 10.65 million barrels per day.

Oil had been moving lower all session on the back of reports OPEC and Russian crude oil production rose during July, while a larger than expected DOE inventory build confirmed the API reports from Tuesday. US crude CLc1 rose $1.30, or 1.9 percent, to $68.96 a barrel.

Tensions between the USA and Iran are also supporting the market, Barratt said.

Brent crude futures were last down 33 cents at $72.06 a barrel by 12:00pm GMT, while United States crude futures fell 55 cents to $67.11.

According to a Reuters poll earlier this week, 44 economists and analysts expect the US sanctions to take between 500,000 bpd and 1 million bpd of Iranian crude oil off the market.

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Joel Schreurs, a soybean farmer from Tyler, Minnesota, said the plan was a "good start" but not a fix that works in the long run. While a trade mitigation package could boost farmer morale in the short term, this is ultimately a short term fix.

There were also factors holding oil markets in check. "A lot of this is the risk premium priced in for Iran and when do we start seeing an impact on supply there", ING commodities strategist Warren Patterson said.

Additionally, Russia appears to have increased its production in line with OPEC's decision in late June to increase its output, with its crude and condensate production increasing 1.4% last month to 11.215 million b/d, the energy ministry said yesterday.

"At the moment, there is a mismatch in timing, where there is increasing OPEC supply and yet we're not seeing a significant reduction in Iranian supply", Patterson said.

Brent prices fell more than 6 percent in June and USA crude slumped about 7 percent, the biggest monthly declines for both benchmarks since July 2016.

Oil prices are feeling the effects of ongoing tensions over global trade, with markets concerned about any slowdown in growth around the world.

U.S. President Donald Trump has sought to ratchet up pressure on China for trade concessions by proposing a higher 25 percent tariff on $200 billion worth of Chinese imports.

The price jump earlier this summer had come about in large part because of President Donald Trump 's decision to pull the USA out of an worldwide agreement to curb Iran's nuclear program. After Trump called for a 15 percent increase in tariffs on Chinese goods earlier this week, Beijing on Friday announced it was targeting $60 billion worth of US goods in response. Crude oil production is now expected to average 11.8 million bpd in 2019.

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