0-Oil edges up after choppy session on mixed USA crude…

Marsha Scott
March 16, 2018

And analysts with ClearView Energy Partners claim that the nuclear deal could remain intact even if the United States leaves, ultimately having minimal impact on global supply.

The increases in USA production has this year exceeded the supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC), which have been in place since 2017 in an effort by the cartel, and supported by non-OPEC member Russian Federation, to prop up prices.

Crude oil prices have fallen in the last 24 hours. In January, oil traders shrugged off this bearish assessment, driving Brent up to $70. But this is what's so interesting - Increased production by USA petroleum companies didn't happen overnight. But there was a larger-than-expected draw on fuel stocks.

Indeed, stocks rose despite a jump in inputs to refineries.

After collapsing to under $30 a barrel at the beginning of 2016, prices have gradually risen to above $60 as the OPEC cartel and Russian Federation have restrained production to try to eliminate the glut in output.

USA jobs data showed a healthy increase in oil and gas sector employment, up 1,100 in February, an acceleration after steady gains past year. But after that, as the historic shale expansion slows to more pedestrian levels, "the market might well need the supplies now being held off the market by leading producers", the IEA said. This tends to support the notion of a "balanced" market. This measures the amount of oil in storage relative to how many days that supply could cover. Of late, hedge funds and other money managers have started to lay bearish bets on oil futures. A weaker dollar makes oil cheaper for holders of other currencies.

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Oil is the lifeblood of OPEC member Venezuela's economy, but a major wave of political unrest that shows no sign of abating has slashed output. In the upcoming June meeting, a possible exit from production cuts next year may be discussed. OPEC trimmed its 2018 demand forecast for its own crude by 250,000 bpd to 32.61 million bpd, a fourth consecutive decline. Motor gasoline demand averaged a summerlike 9.2 million barrels per day, up by 2.5% from the same period past year.

When the front-month contract is trading at a lower level than a later-dated contract, it suggests emerging concerns about growing supply, and reduced need to buy oil now.

The increases in production has this year exceeded the supply cuts led by the Organization of the Petroleum Exporting Countries.

Iraq is talking with the Kurds and Turkey about restarting crude shipments from fields in the Kirkuk area of northern Iraq, Oil Minister Jabbar al-Luaibi told reporters in Basra.

But by 2023, if investment remains insufficient, the effective global spare capacity cushion falls to only 2.2 per cent of demand, the lowest number since 2007.

Other reports by MaliBehiribAe

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