Oil prices decline amid rising output

Gladys Abbott
August 6, 2018

Oil prices went down on Wednesday as official data showed that USA crude stockpiles rose unexpectedly last week.

An oil tanker unloads crude oil at a crude oil terminal in Zhoushan, Zhejiang province, China July 4, 2018.

USA crude inventories rose 3.8 million barrels last week as imports jumped, the government's Energy Information Administration said.

USA crude oil supplies increased by around 3.8 million barrels last week.

The question regarding Iranian oil supply now is, can the Trump Administration get everybody else except China, which has already said it won't recognize USA sanctions on Iran, out of the market, according to the strategist. Additionally, he said, USA monthly figures for production fell in May, suggesting that output may be curbed later in the year, he said. Brent crude futures LCOc1 were at $73.42 per barrel, down 3 cents from their last close. In the previous week, total USA inventories rose 3.8 million barrels, while supplies at Cushing fell 1.3 million barrels.

Before the Genscape report sparked a rally, futures fell early on concerns about oversupply.

Alongside Russia, OPEC kingpin Saudi Arabia and other members of the Middle-East dominated oil cartel agreed in late June to begin increasing production by up to 1 million barrels per day starting in August.

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"The increase in production is aimed at maintaining stability of the (global) oil market within the framework of joint actions of OPEC and non-OPEC countries", Novak said. "The spread structure is back in contango, which suggests the market is well supplied so there's a mismatch in timing with OPEC now raising output", Warren Patterson, commodities strategist at ING, said.

The kingdom has been under acute pressure from President Donald Trump to open the taps as he chokes off exports from Saudi's political rival, Iran.

"There are a lot of escalation points that could occur very quickly and that worries me", Jonathan Barratt, chief investment officer at Ayers Alliance in Sydney, said.

Meanwhile, trade war concerns have resurfaced again on reports the Trump administration is planning to propose a 25% tariff on goods worth over $200 billion imported from China, instead of the original proposal for a 10% levy. China has said it will retaliate.

In addition, inventories at Cushing shrunk by 1.338 million barrels, adding to last week's 1.127 million barrels drop.

LONDON, Aug 3 (Reuters) - Brent oil futures steadied under $74 a barrel on Friday as the market focused on bearish longer-term factors after gains in the previous session, which were driven by US crude inventories in at a major hub falling to their lowest in almost four years.

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