Oil futures steady on market's long-term bearish focus

Daniel Fowler
August 6, 2018

Brent crude futures were at $73.15 a barrel, down 30c from their last close.

Prices had tumbled to a six-week. "Brent oil may fall to $67 per barrel", said Reuters technical commodities analyst Wang Tao.

The weekly estimates for May all point to more than 10.7 million bpd of crude oil production, but the more accurate-albeit lagged-data, based on survey of producers, shows that USA oil output had trailed projections by around 300,000 bpd.

Alongside Russia, OPEC kingpin Saudi Arabia and other members of the Middle-East dominated oil cartel agreed in late June to begin increasing production by up to 1 million barrels per day starting in August.

Futures fell for the third day in NY, losing as much as 1.1 per cent to hit their lowest level since June 22, but US government's data showed a surprise gain in nationwide stockpiles on Wednesday.

Higher crude output from the Saudis, along with Nigeria and Iraq, pushed up total production from the Organization of Petroleum Exporting Countries by 300,000 barrels a day, offsetting losses from a spiraling economic collapse in Venezuela, political clashes in Libya and the onset of US sanctions against Iran.

According to the Weekly Petroleum Status Report, U.S. commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve (SPR), increased by 3.8 million barrels last week.

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Hedge funds and other money managers cut their bullish US crude bets in the latest week, as oil prices were range-bound, pinned between concerns about tight supply due to sanctions and fears that trade disputes could curb demand.

Oil prices are feeling the effects of ongoing tensions over global trade, with markets concerned about any slowdown in growth around the world.

In the previous week ending July 20, EIA reported a draw of 6.1 million barrels.

Russian oil output rose by 150,000 barrels per day in July from a month earlier, surpassing the amount Moscow had said ti would add following a meeting of global oil producers in Vienna in June, energy ministry data showed on Thursday. Higher crude output from the Saudis, along with Nigeria and Iraq, pushed up total Opec production by 300,000 barrels a day last month. In the previous week, total US inventories rose 3.8 million barrels, while supplies at Cushing fell 1.3 million barrels.

Meanwhile, Russia boosted its oil production in July to just below the post-Soviet record set in October 2016, Energy Minister Alexander Novak said.

Gasoline stocks fell by 2.5 million barrels, compared with analysts' expectations in a Reuters poll for a 1.3 million-barrel drop.

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