Oil falls as USA crude inventories jump unexpectedly

16 August, 2018, 17:18 | Author: Gerard Cortez
  • Saudi Arabia reins in oil production as demand forecasts waver

Analysts surveyed Monday by S&P Global Platts were looking for U.S. crude stocks to have fallen 1.7 million barrels in the week ended August 10, with refinery runs remaining high on healthy margins and strong export demand.

Analysts said the expansion of positions by participants was in line with a firming trend overseas, where oil prices rose after a report from OPEC confirmed that top exporter Saudi Arabia had cut production to avert looming oversupply.

OPEC expects that average oil production in Russian Federation will be 11.15mn barrels per day in 2018 and 11.17mn barrels daily in 2019.

OPEC production averaged 32.32 million barrels per day (bpd) in July, 40,700 higher than June, according to the group's monthly oil market report, based on secondary source figures. Saudi Arabia's July production fell to 10.387 million barrels a day, a month-over-month decrease of about 53,000. Even with the July cutback, Saudi Arabia's output remains higher than the 2017 yearly average and higher than either the first or second quarter average this year.

Saudi Arabia cutting its oil production in July and the prospect of continued strength in the US dollar may not seem to have anything in common; but both are yet more indicators that crude prices will likely continue to drop in the foreseeable future, according to the experts.

In addition, OPEC reduced its projection for global oil demand growth for this year by 20,000 to 1.64 million bpd, while lowering the forecast for the next year by 20,000 to 1.43 million bpd.

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Global demand growth for 2018 was forecast at 1.64 million barrels a day, down by 10,000 from the prior month's estimate.

Oil futures fell more than $2 a barrel on Wednesday after data showed USA crude stockpiles jumped last week, compounding worries about a weaker global economic growth outlook.

The cartel estimated 2018 non-OPEC supply rose by 73,000 barrels a day to 59.62 million.

Brent crude futures LCOc1 were down $1.96 a barrel at $70.50 a barrel by 11:07 a.m. EDT [1507 GMT].

Meanwhile, investors were watching the impact of USA sanctions on Tehran, which analysts say could remove as much as 1 million bpd of Iranian crude from the market by next year.

Crude prices were lower Monday morning, with West Texas Intermediate for September delivery trading down about 0.4% at $67.33.

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