Friday, 24 May, 2019

Oil prices drop on surprise U.S. stockpile build

Crude Oil Crude Oil
Ginger Lawrence | 10 June, 2018, 03:10

USA crude stockpiles decreased by 2.03 million barrels last week, while the hoard at the key storage hub in Cushing, Oklahoma, fell by 1.04 million barrels, the industry-funded API was said to report.

Crude prices came under pressure after data suggested Chinese demand was waning and concerns lingered about growing US output.

The crude oil prices witnessed a two month low in the NY session on Wednesday and there is buy on all dips.

"The relentless climb in USA production has also taken the spotlight away from United States oil inventories, which still paint a strong picture", he said in a weekly emailed report.

Brent crude futures added 25 cents, or 0.33 percent, to $75.53 a barrel by 0717 GMT, after settling down 2 percent at $75.29 on Monday.

"Venezuela's worsening economic crisis, together with ongoing geopolitical tensions in the Middle East, will remain supportive of oil prices", Abhishek Kumar, Interfax Energy senior analyst said.

The Organization of the Petroleum Exporting Countries and other producers including Russian Federation have cut output since 2017 to reduce a global crude glut.

OPEC will meet on June 22 and needs a consensus of all members to officially change its output policy.

Donald Trump: Top economies should drop all tariffs
Trump pulled out of President Barack Obama's landmark nuclear accord with Iran over the objections of European allies. Trump will be leaving the summit four hours earlier to travel to Singapore to meet North Korean leader Kim Jong-un.

After such a violent trend reversal on credible fundamental news (Saudi/Russian output curve eases to offset the loss of Iran/Venezuelan exports) means the world's "paper oil" speculators, who trade 1.5 billion barrels a day or 15 times the crude stored in supertankers and onshore terminals, will go short oil.

Further weighing on prices has been rising USA output C-OUT-T-EIA , which hit another record last week at 10.8 million bpd.

Pradhan is referring to the prospect of Saudi Arabia increasing production under the Organization of the Petroleum Exporting Countries (OPEC), in order to offset undue market tightening as a result of dramatically declining output in Venezuela and declining exports from Iran (as a result of the us resuming sanctions against the Islamic republic).

Donald Trump asked for Saudi Oil Support one day before he announced the end of Iran Nuclear Deal.

Customers waiting for cargoes include U.S. Chevron Corp, India's Nayara Energy and China National Petroleum Corporation (CNPC).

Headlines on OPEC members' plans for the meeting later this month will lead to volatile market swings, said Tariq Zahir, managing member of Tyche Capital Advisors in NY.

Oil prices rebounded on Tuesday on expectations that inventories in the United States may decline, but increasing USA production and concerns that OPEC may raise output continue to weigh on sentiment.