Crude oil futures edge higher as focus shifts to U.S. inventories - Oil

28 June, 2018, 06:58 | Author: Barbara Daniel
  • Oil falls on OPEC's announced output rise, but markets to remain tight

The Libyan National Army has retaken the key eastern oil terminals of Ras Lanuf and Es Sider that shut 450,000 b/d of crude production, the head of the state-owned National Oil Corp. said Friday.

As a backdrop to the talks, US President Donald Trump had pressured OPEC via social media to "increase output substantially".

Saudi Arabia and Russian Federation initially proposed raising output after curbs by OPEC and its allies since past year helped eliminate a global glut and boosted Brent crude to US$80 a barrel for the first time since 2014.

Meanwhile, analysts surveyed Monday by S&P Global Platts were expecting U.S. crude stocks to have fallen 2.3 million barrels in the week ended June 22.

"With the global market pricing to pull crude out of the US, this loss of USA supplies will exacerbate the current global deficit, making the increase in OPEC production all the more required", the analysts wrote in the report.

In contrast, U.S. West Texas Intermediate crude was up 29 cents at US$68.87 a barrel on Monday. Total volume traded was 37 percent above the 100-day average. The differing reaction narrowed Brent's premium to $5.81 from more than $10 last week.

Barkindo said this on Sunday, stressing that the move was to increase oil prices by one million barrels a day, starting July 1, 2018.

Other oil-importing economies, especially emerging markets such as India that have been affected by the rising cost of oil imports, have also been exerting pressure.

"We've adjusted our model to reflect the quota changes, extended Venezuelan declines to 800,000 b/d by YE19 (from 1.4 million b/d currently), and assumed a ~0.5 million b/d reduction in Iranian exports in 2019", Featherston said. That's a signal that exports from the Islamic Republic may fall much further, more quickly than expected. It simply stated that OPEC countries would "strive" to adjust production levels in order to conform to the terms of the production cut deal reached in 2016.

The outcome of the OPEC meeting was an additional 1 million barrels per day on top of 32-33 million barrels per day of its current production, a decision that was attributed to consumers from the United States to India and China expressing anxiety over rising prices.

Even if output were increased aggressively, the group's announcement doesn't threaten "to create a large reversal in fundamentals", Goldman said.

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