nsucurrent.com
nsucurrent.com August 19, 2017


As OPEC cuts, United States oil exports surge

12 June 2017, 02:40 | Ruby West

As OPEC cuts, United States oil exports surge

An office worker walks past a logo of the Singapore Stock Exchange outside its premises in Singapore

Oil prices dipped on Wednesday, with Brent crude futures failing to find support at $50 per barrel, as global fuel markets remained oversupplied, although rising tension in West Asia and falling United States inventories lent some support.

With oil production of about 620,000 barrels per day (bpd), Qatar is one of the smallest crude producers in the Organization of the Petroleum Exporting Countries, but some investors fear tension within the cartel could weaken its agreement to hold back production in order to prop up prices.

The Energy Information Administration reported on Wednesday that USA crude stockpiles climbed 3.3M barrels in the week ended June 2, following the preceding week's drop of 6.4M barrels.

Analysts generally attributed the price increase to concerns over supply disruptions in the region, but it should be pointed out that despite the market reaction, the actual impact of the Middle East rift on the global oil supply situation will be limited. But stubbornly high fossil fuel inventories - which have been maintained worldwide, but are most readily measured in the USA due to open customs data - have prevented the measures from buttressing oil prices in a lasting way. 6 million barrels of oil was added to commercial inventories and it is possible that the API did not have that reported into their equation.

Commodities brokerage Marex Spectron said it expects a "lower supply of crude oil on the physical market" in the coming weeks, lending oil prices some support. The API estimated that United States crude oil inventories fell by 4.6 MMbbls (million barrels) between May 26, 2017, and June 2, 2017.




August Brent crude oil closed at $48.16, down 1.96 or -3.91% and July WTI crude oil settled at $45.78, down 2.41 or -5.00%.

There are already doubts that the effort to curb production by nearly 1.8 million bpd is seriously denting crude exports.

As concerns about supply persist, US drillers have added rigs for 20 straight weeks, the longest streak in at least three decades, undercutting efforts by the OPEC to cut production and eliminate a global glut. Despite the increase in crude production, US crude inventories have decreased for eight straight weeks.

The rise in US production has been driven by a record 20th straight weekly climb in oil drilling for new production, with the rig count climbing by 11 in the week to June 2, to 733, the most since April 2015.



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