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Oil prices fall amid record US output, stockpile build

21 July, 2018, 15:41 | Author: Shawna Walton
  • Media: Japan halts imports of oil from Iran

West Texas Intermediate crude for August delivery, which expires Friday, rose $1.34 to $70.10/bbl at 10:05 a.m. on the New York Mercantile Exchange.

Brent futures were down 40 cents, or 0.6 percent, at $71.76 a barrel by 0027 GMT.

In fact, Russian Federation and Saudi Arabia have both started to increase their crude oil production, even before the OPEC+ meeting on June 22.

He also said concerns that Saudi Arabia and its partners are moving to substantially oversupply the market are "without basis". Holding production steady would mean shipping less crude than Saudi Arabia indicated after the Opec deal.

The black gold had closed decisively lower in NY on worries of excess supply, with reports that Saudi Arabia is looking to increase production.

A sharp jump in US crude oil inventories also added to the bearish tone in the market.

Solid economic and energy market fundamentals also underpinned the strongest USA petroleum demand since 2007, at 20.6 million bpd.

Crude prices pulled back from highs earlier in the session as traders cashed in on profits, said John Kilduff, a partner at Again Capital Management in NY.

The South Asian nation is already buying more crude from the US, data from the Census Bureau and Energy Information Administration show. "Escalating trade tensions between the USA and China will also be conducive to more US oil coming to the Indian market".

Despite the jump, inventories at the USA oil delivery hub for WTI in Cushing, Oklahoma were forecast to have fallen 1.8 million barrels, or 6.2 percent, through Tuesday, traders said, citing energy information provider Genscape.

"The correction in the oil price represents something of a convergence between fundamentals and physical realities", David Reid, lead crude market analyst at consultancy JBC Energy, told Reuters. Nonetheless, the jump in crude inventories may suggest that USA production is able to keep up with strong demand. U.S. Administration is actively considering releasing part of the 660-million-barrel SPR, with options ranging from a test sale of 5 million barrels to a release of as much as 30 million barrels, and even higher if coordinated with other countries.

In 2017, Turkey imported 24.9 million tons of crude oil in total, mainly from Iran (almost 50 percent) and the rest from Iraq, Russia, Kuwait and Saudi Arabia.

U.S. crude strengthened late in the session as the U.S. dollar index slipped to a four-day low, on reports that U.S. President Donald Trump worries that the Federal Reserve will raise rates twice this year. Considering that Iranian exports dropped to about 1-1.5 million bpd during the 2013-2015 period of strong economic sanctions (from around 2.5 million bpd in 2011 to some 1 million bpd at the end of 2013), depending on how many countries follow the White House's call for sanctions today, we might expect Iranian exports to fall by between 200,000 bpd and 1 million bpd.

However, comments by Saudi Arabia's Energy Ministry, pledging not to flood world markets with oil, turned the momentum around on Thursday and helped the commodity to rebound sharply from an intraday low level of $66.62.

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