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Oil drops 2% as United States climate withdrawal compounds glut concerns

06 June, 2017, 06:37 | Author: Paula Vaughn
  • Oil falls on potential undermining of OPEC-led deal

Oil rebounded from the lowest close in more than two weeks after industry data showed USA crude stockpiles extended declines, easing an inventory overhang.

"Trump seems to be removing any barriers he can find that would obstruct growth of crude oil or natural gas", said Stewart Glickman, energy equity analyst at CFRA in NY.

The Organization of the Petroleum Exporting Countries pledged to reduce output by about 1.2 million barrels per day (bpd) for six months from January 1 as part of a deal with Russian Federation and other non-members.

On Monday the price of oil went up slightly as caution ruled the market as it increasingly becomes clear that the OPEC-led efforts to reduce supplies are being undermined by drilling activity in the United States. The African producer now cranks out around 830,000 barrels a day, a huge jump compared with the sub-300,000 barrels a day seen in last July.

U.S. President Donald Trump's withdrawal from the Paris agreement, the landmark 2015 global pact to fight climate change, drew condemnation from Washington's allies and many in the energy industry - and sparked fears that U.S.

Both crude benchmarks fell by about 3 percent to three-week lows on Wednesday after news that an increase in Libyan oil production helped to boost monthly OPEC crude output in May, the first monthly rise this year.

Crude stockpiles were down by 6.4 million barrels in the week to May 26, compared with analysts' expectations for a decrease of 2.5 million barrels. While U.S. stockpiles have edged lower, rising American production and drilling is fanning concerns that OPEC's efforts to trim a global glut will be hampered.

Veterans Affairs to revamp how it stores veterans' health information
The decision to purchase a new commercial system rather than fix the VA's in-house system, called VistA, was long-awaited. Shulkin said there is a public interest exception that necessitated fast-track approval.

However, US crude production rose to 9.34 million bpd last week, up almost 500,000 bpd from a year ago.

Higher supply from Nigeria and Libya, OPEC members that are exempt from the production-cutting deal, offset improved compliance by others.

During the reporting period, the Organization of Petroleum Exporting Countries and its partners extended their existing cuts by nine months.

In its weekly rig-count report issued Friday, oil services group, Baker Hughes said 11 extra rigs were being used to look for oil last week taking the figure in total to 733.

In Libya, output has recovered to 827,000 bpd after technical problems were resolved at the Sharara field. Speculators fled bearish positions for a second week.

Russia's Rosneft CEO Igor Sechin also said the market can not stabilize unless all producers cut output.

"As these numbers are getting confirmed, the initial optimism about OPEC's temporary cuts, may turn to increasing skepticism about OPEC's choice of policy once the current output deal expires next year", Tonhaugen said.


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