Expect Lower Oil Prices

Kenny Grant
August 6, 2018

Brent crude futures were last down 33 cents at $72.06 a barrel by 12:00pm GMT, while U.S. crude futures fell 55 cents to $67.11.

US West Texas Intermediate (WTI) crude futures were at $68.70 a barrel at 8.47am GMT, down 26c from their last settlement.

Prices had tumbled to a six-week.

The survey shows Saudi Arabia's output was below the 10.8 million barrels a day threshold that the kingdom was said to be indicating it would pump in July, suggesting demand for its oil isn't as strong as initially expected.

On Tuesday, the EIA reported that USA crude production fell 30,000 barrels per day to 10.44 million bpd in May.

Saudi Arabia, Russia, Kuwait and the United Arab Emirates have increased production, as agreed at a meeting in June, to help to compensate for an anticipated shortfall in Iranian crude supplies once USA sanctions come into force later this year. On Tuesday, crude oil futures for September ended down $1.37 or nearly 2%, at $68.76 a barrel.

On Friday, the U.S. Department of Labor reported total non-farm payrolls increased 157,000 in July, lower than the net average gain of 203,000 over the last 12 months.

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To be sure, production jumped from a year ago-by 13.3 percent from the 9.217 million bpd production in May last year. However, low stocks were still providing a floor as even with last week's rise, overall USA crude inventories are below the five-year average of about 420-million barrels.

China said it would hit back if the United States takes further steps hindering trade, as the Trump administration considers slapping a 25 percent tariff on $200 billion worth of Chinese goods.

US crude oil exports to China dropped by roughly 42% in July as the appetite for light sweet USA crude declines in the Asian giant ahead of the start of 25% tariffs on USA oil imports, Kallanish Energy learns. The country has been pumping more following "joint efforts of OPEC and non-OPEC countries aimed at stabilizing the oil market", he said.

His comments indicate that Russian Federation was producing above the level announced by Moscow after the OPEC+ meeting in June.

OPEC+ may discuss whether a bigger production increase is needed when they meet in September, Novak said last month. Under constant pressure from US President Donald J. Trump to cool prices, Opec and its allies are fulfilling a pledge made in June to increase output to ease concerns over potential supply disruptions in countries such as Iran and Venezuela.

"Under different scenarios, Iranian supplies could drop as much as 0.8 million barrels per day".

When OPEC met in June, it agreed it had been cutting supplies excessively and should restore output to 100 percent of a target set in late 2016.

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