Published: Thu, August 02, 2018
Economy | By

Oil prices fall as OPEC increases production

Oil prices fall as OPEC increases production

This is a sign that traders are not buying the commodity with conviction. "It is the impact of the USA sanctions on Iran that will decide the next $15 a barrel", PVM Oil Associates Tamas Varga said in a note.

"It's just this witches' brew of supportive factors from Iran to the Syncrude", John Kilduff, founding partner at energy hedge fund Again Capital, told CNBC. "It's duck and cover and keep an eye on your Twitter feed".

Crude is poised for the biggest monthly loss in a year as simmering trade tensions between the USA and China pushed prices lower at a time when American shale output continues to surge.

Meanwhile, Brent lost almost $11 over three sessions spread throughout the first four weeks of July.

"U.S. oil production growth appears to have stalled out and actually declined a fair amount on the week".

The United States pulled out of an worldwide nuclear deal with Iran in early May casting uncertainty over global oil supplies, and since then it has been preparing to work with countries to help them to cut Iran oil imports. The White House later walked back that claim, saying the king would take an increase under consideration.

Saudi Arabia said the decision would translate into an output rise of about one million bpd.

Brent crude ended the week up 1.7%, WTI added 0.6% - the first weekly gains for both contracts in four weeks.

Earlier in the day, Trump lobbed the latest in a series of Twitter critiques at OPEC, ordering the world's cartel to reduce prices immediately.

This is the 10th consecutive month in which analysts have raised their oil price forecasts.

The Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC countries agreed to raise supply in a meeting last month to meet rising global demand, but the group did not specify a clear target for the output increase.

The sharp fall in United States oil stocks is tempering concerns of oversupply and indicating that the global supply-demand picture may remain favourable.

Upbeat tone in crude oil helped by easing trade tensions.

Production of crude oil is expected to stay at record highs for the time being despite pipeline constraints in the Permian-the top performer in the USA oil patch. High temperatures in Japan forced utility suppliers to restart oil- and gas-fired power plants, that were previously left on standby, back to production. Mnuchin told reporters the administration wanted to avoid roiling oil markets as it pursued its Iran policy. Brent fell toward $74, down about 6.5 percent in July.

OPEC production rose in June, led by Saudi Arabia, and reached a 2018 high in July, a Reuters survey found on Monday, although declines from Iran, facing us sanctions, and other producers limited the increase.

Oil retreated in NY, heading for its biggest monthly loss since March 2017, as some of the supply risks facing the market abated.

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