Commodities - Oil Prices Firm on Rising US Crude

Daniel Fowler
August 9, 2018

U.S. West Texas Intermediate (WTI) crude futures fell to a almost seven-week low during the session and were last trading down $2.63, or 3.8 percent, at $66.54. WTI settled at $69.17 on Tuesday and opened at $69.11 Wednesday morning.

Net long positions in Brent and WTI were cut from a peak of 1.093 billion barrels in mid-April to 790 million barrels by the end of the first week in June, and have changed relatively little since then.

Saudi Arabia's crude production dropped about 200,000 bpd last month, two sources at the Organization of the Petroleum Exporting Countries said on Friday, despite a pledge by the Saudis and top producer Russian Federation to raise output from July, with Saudi Arabia promising a "measurable" supply boost.

They said Iranian exports were likely to drop by up to 1 million bpd by November but even that could push Brent to $85 per barrel if oil markets were hit by other disruptions in producer countries such as Libya or Venezuela. Following the announcement by EIA, the WTI lost 2.78 percent to 67.25 US dollars, while Brent decreased 2.55 percent to 72.75 dollars.

Additionally, there are also reports that many US shale oil drillers posted disappointing quarterly results in recent weeks, hit by rising operating costs, hedging losses and a drop in crude prices away from 2018 highs reached between May and July.

EIA reported a draw of 1.35 million barrels of crude oil inventory for the week ending August 3, which was lower than market's expectation of 3.1 million barrels draw.

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He said, the "unlawful act, which was done without the knowledge of the Presidency, is condemnable and completely unacceptable". Some PDP senators, who were caught in the blockade interpreted it as a move to impeach Senate President Bukola Saraki .

It also is not clear if the State Department could allow sanction waivers, which were used in the Obama era to wean the world off of Iranian oil and avoid supply shocks.

However, the second round of sanctions has the potential to devastate Iranian exports. The agency expects crude production to average 11.7 million bpd in 2019, compared with 11.8 million bpd previously.

Refinery crude runs rose by 118,000 barrels per day, EIA data showed. Exports of refined products rose by 174,000 barrels a day last week to 5.2 million.

USA gasoline futures fell 3.8 percent to $2.025 per gallon.

The real negotiations now take place between Riyadh and Moscow, behind closed doors and far away from OPEC headquarters in Vienna, reflecting their market calculations, and relationships with the United States.

Here is a look at how share prices for two blue-chip stocks and two exchange-traded funds reacted to this latest report. As of last night's close, Chevron shares are trading up about 12.5% over the past year. A trade spat between the USA and China has kept oil from rebounding from a seven per cent plunge last month.

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