Monday, 18 June, 2018

WTI sidelined above session lows, around $66.50

Oil prices fall as supply from top three producers set to rise Oil prices fall as top three producers look to boost supplies
Cristina Norman | 30 May, 2018, 18:38

The Brent oil price fell by 1.4 per cent and was as of 2.11pm at $75.39 while the West Texas Intermediate (WTI) price was down to $66.75 which is a decrease of nearly 1.7 per cent.

Meanwhile, surging US crude production also showed no sign of abating as drillers continue to expand their search for new oil fields to exploit.

Reacting to comments from the Saudi oil minister, crude oil prices have fallen more than $5 per barrel in the past few days.

However, if US crude exports to Asia do surge to more than 1 million bpd in coming months, this could provide the Saudis and the Russians with an added incentive to make more oil available to the market, and at a more competitive price.

Trump tweeted last month that OPEC had "artificially" boosted oil prices. Thus it is in the direct interest of the Saudis to maintain oil at a high price.

US West Texas Intermediate crude was down $1.05, or 1.55%, at $66.83 a barrel, sitting around its lowest since 17 April.

To be certain of this, Saudi Arabia keeps advocating for the reduction of oil production from the Organisation of Petroleum Exporting Countries (OPEC), which for the first time, have been really effective through various agreements signed among the OPEC member states. Prime Minister Dean Barrow in a press conference recently said that prices would be going up due to the rise in price on global markets.

Adding to this, OPEC achieved its goal to trim OECD crude oil stocks to below the five-year average after agreeing to cut output more than a year ago, a senior OPEC source told S&P Global Platts on Monday.

Ahead of the Organisation of the Petroleum Exporting Countries' meeting in Vienna on June 22, concerns that Saudi Arabia and Russian Federation could boost output have exerted downward pressures on oil prices, along with rising production in the United States.

Saudi Arabia has 22 per cent of the world's petroleum reserves and is the world's largest exporter.

Despite worries over Iranian and Venezuelan oil, there are many solutions for the global supply system to fill the gap and prevent any supply constraints.

The record outbound volumes come as U.S. crude production hit all-time highs, depressing USA prices to discounts of more than $US9 a barrel below Brent crude futures on Monday, the widest in more than three years and opening an arbitrage for excess supplies to other markets.

OPEC is once again between the rock of US shale production and exports, and the hard place of budget gaps and investment projects that need funding. So far, the cartel has gone where Saudi Arabia has wanted it to go, some more willingly than others, but still together, as higher prices are generally good for oil-dependent economies.

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