Published: Tue, June 20, 2017
Business | By Max Garcia

Expect crude oil prices to trade positive: Sushil Finance

In its first forecast for 2018, the International Energy Agency said Wednesday it expected countries outside the cartel to increase production by about 1.5 million barrels per day, outstripping the growth in global demand.

US crude inventories rose 2.753 million barrels at the end of last week, the American Petroleum Institute (API) said on Tuesday, well above the 2.739 million barrels decline expected.

In the US, which is not participating in any deal to reduce production, oil output has risen more than 10 percent in the past year to 9.3 million bpd.

The IEA expects global oil demand to rise by 1.4 million barrels a day in 2018-but non-OPEC supply alone is set to edge up by 1.5 million barrels.

Riyadh is leading an effort by the Organization of the Petroleum Exporting Countries, Russia and other oil producers to cut output by nearly 1.8 million bpd until March 2018 to curb oversupply.

High inventories have weighed on the futures' market's crack spreads, a measure of refining margins, throughout spring when refiners produce more gasoline for driving season. He also said that the last time the price of oil fell, so did the stock market, and he feels that "a substantial drop in the price of oil would create a global recession". The fall in USA crude oil imports to 8,025, 000 bpd during the same period also led to the fall in inventories.

Industry sources with knowledge of Saudi crude exports data said state oil company Saudi Aramco aimed to cut its exports to the United Sates to below 1 million bpd in June and July.

"Production growth in Libya and Nigeria and continued rig additions in the US are complicating the picture, raising doubts on OPEC's strategy", AB Bernstein said, reports CNBC.

US crude production has been steadily growing and last week rose to 9.33 million bpd, up 12,000 from the previous week, the EIA said.

Some traders still hope that Wednesday's readings from the USA government will show declining inventories for oil and gasoline, as numbers from the Energy Information Administration don't always match those from the API.

Rising U.S. oil output, particularly from shale drillers, is contributing to the ineffectiveness of the OPEC-led cuts. He said he believed the price of worldwide benchmark Brent crude would have to drop to $45 a barrel before U.S. rig growth slowed. Total OPEC production for May was 32.1 million barrels per day, an increase of about 1 percent, or 336,000 barrels per day, from the previous month.

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