Published: Thu, July 13, 2017
Economy | By Melissa Porter

Crude prices rise in anticipation of statistics from US

Crude prices rise in anticipation of statistics from US

Global oil prices extended gains Wednesday following data that suggested us production may not rise as quickly as expected next year and a a larger-than-expected decline in commercial crude stocks.

Traders noted Tuesday's crude price declines were mitigated by reports Saudi Arabia exceeded its OPEC production target and notes from banks lowering oil price forecasts for this year and 2018.

Output by all 13 OPEC members in June rose to about 32.47 million barrels per day, according to the average assessments of secondary sources OPEC uses to monitor its output.

WTI rose sharply yesterday after reports surfaced that despite large draw on inventories by refiners, Europe is running short on final fuel products. USA 2018 demand is expected to increase by 360,000 bpd, up from 310,000 bpd previously.

The oil cartel and US shale producers began dialogue earlier in March this year.

Goldman Sachs analysts said in a July 10 report that oil prices could dip below $40 per barrel (bbl) as the "market tests OPEC's and shale's reaction". USA crude was trading up 62 cents to $45.66 by 10:44 a.m. EST (1544 GMT).

While Barclay;s Michael Cohen begs to differ, on his recent note he said that "In spite of these factors, flattening front-month timespreads, strong physical markets and refinery margins, substantial United States weekly inventory draws, and new unplanned outages in non-OPEC countries should keep Brent prices from declining to less than $45/b".

"We (OPEC) are fairly in consensus on our position on cuts", he said, adding that OPEC hoped oil prices would stabilize later this month.

Before EIA released the storage report, Brent was up 1.9% and USA was up 2.4%. On Tuesday, it said the nation would pump 9.9 million barrels a day - still the highest annual average output on record.

OPEC is struggling to build momentum for a multilateral effort to balance the market through managed production declines.

Iran is pushing for an increase in production to 4 million barrels per day by the end of the year.

Libya and Nigeria, two OPEC members exempt from cutting output, once again led the increases.

The source also cited late May port closures as pushing some cargoes into June, which may have resulted in higher June exports.

"The oil price... climbed sharply overnight as the Energy Information Agency cut its forecast for U.S. production in 2018 and API data showed another large inventory drawdown", William O'Loughlin of Rivkin Securities in Darlinghurst, New South Wales, Australia said. In 2016 OPEC's internal demand hit 28 percent.

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