Oil pares gains despite U.S. drawdowns as stocks still high

Oil pares gains despite U.S. drawdowns as stocks still high

Today's price increases is due in large part to the Energy Information Administration's revised forecast that USA oil production would produce 9.9 million barrels daily in 2018-down from its previous forecast of 10 million bpd.

We can't look to big oil to suddenly make up the difference.

Saudi Arabia's state-run oil giant said it would cut the price of its lighter crude grades to Asia in August, amid rising competition from rival producers in the Organization of the Petroleum Exporting Countries (OPEC). One of these "shock and awes" could be a drop in USA inventories, despite the fact that the recent inventory draws, however substantial, failed to move prices much higher.

OPEC is struggling to build momentum for a multilateral effort to balance the market through managed production declines. U.S. rig counts rose by 7 units to 763 units last week, the highest level since April 2015.

USA crude imports fell last week by 282,000 bpd.

Before EIA released the storage report, Brent was up 1.9 percent and WTI was up 2.4 percent.




Editor's Remarks: US oil companies faced a 40-year ban on most crude exports until 2015.

The current market downturn is lasting longer than previous slumps, due largely to 700,000 to 800,000 barrels a day of additional supply from the U.S., he said.

In OPEC's July monthly oil-market report (a PDF), the organization projected a 2% rise in non-OPEC oil supplies in 2018, with the lion's share from the United States, followed by Brazil, Canada and Russian Federation.

In an emailed report, British financial services company Barclays said it "seems a stretch" for the average price for Brent crude oil, the global benchmark, to hit the mid $50 range during the third quarter. The restrictions had been introduced in 1975, two years after OPEC banned oil sales to the US, a move that sent gas prices skyrocketing. S&P has already downgraded Exxon Mobil, Royal Dutch Shell, Total, BP.

Crude exports for August will fall to their lowest level this year at around 6.6 million bpd, the source added. This is the second consecutive monthly oil production increase of the cartel. Crude oil is used to generate electricity for air conditioners during the summer.

USA oil production ticked up by 59,000 barrels a day to almost 9.4 million barrels a day. Market reaction was mixed, but not to such an extent that the decision takers expected support from US shale producers who continued their production. He has 12 years of experience in financial markets.

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