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OPEC May output highest since January

12 June, 2017, 14:38 | Author: Paula Vaughn

"Oil prices declined after data showed an increase in USA crude inventories, fuelling concerns that markets remained oversupplied, despite efforts by top producers Saudi Arabia and Russian Federation to cut output", the Department of Energy said in a statement.

Benchmark Brent crude oil was 20 cents a barrel lower at US$49.27 by 9:50 a.m. ET, down around eight per cent from its level before OPEC and its non-OPEC allies said they were extending cuts until March 2018.

The price signal reflected other signs that an effort led by the Organization of the Petroleum Exporting Countries (OPEC) to curb production by nearly 1.8 million barrels per day (bpd) was starting to impact actual supplies.

In its monthly short-term energy outlook Tuesday, the EIA said USA oil output average 10 million barrels per day in 2018 up from 9.3 million barrels per day now.

The sharp rise in USA inventories comes a day after the EIA lowered its crude oil price forecast and raised its US production outlook for 2018.

The report also revealed a shock increase in diesel and petrol inventories after the EIA estimated United States demand fell by 1 million barrels a day last week. The nations exports to Indian buyers in June were set to decline by just over 3 million barrels, and supplies to Japan will drop by just under 1 million barrels this month, according to a Reuters' source.

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"To add to this, OPEC could face a brewing political crisis as two key members have broken diplomatic ties with Qatar", Gupte noted.

There are already doubts the effort to curb production by nearly 1.8 million bpd is seriously denting exports.

US crude futures were recently down 46 cents, or 0.97%, at $47.20 a barrel on the New York Mercantile Exchange.

"Flagging gasoline demand continues to bedevil the market".

Commodities brokerage Marex Spectron said it expects a "lower supply of crude oil on the physical market" in the coming weeks, lending oil prices some support.

WTI was trading at $48.10 at 2:30pm EST, up 1.48 percent on the day-with Brent trading at $50.05 per barrel, or 1.17 percent up since open. WTI fell 0.5 percent on Monday, while Brent Crude lost nearly 1 percent. Late Tuesday, the American Petroleum Institute, an industry group, reported a 4.6 million barrel drop, but gasoline inventories rose by 4.1 million barrels. Traders believe that the reduction in production of oil by OPEC member countries is one of the reasons why prices are going up.

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