Published: Thu, May 31, 2018
Money | By Ethel Goodwin

This historical crude oil development to drive demand, prices, to the roof

This historical crude oil development to drive demand, prices, to the roof

The Organization of the Petroleum Exporting Countries is due to meet in Vienna on June 22. It was heading for a fifth consecutive daily decline, the longest streak since February 9.

After the United States announced its intention to re-impose sanctions on Iran following its withdrawal from the Iran nuclear deal, 2m barrels of Iranian oil went off the already tight market, pushing the price towards the $80 mark. Saudi Arabia and Russian Federation signaled they'll restore some of the output they cut as part of a deal between OPEC and its allies that took effect in January past year.

Saudi Arabia and Russia's proposal to revive production signals supplies are now tight, and isn't a bearish development, Goldman analysts including Damien Courvalin wrote in a report. Prime Minister Dean Barrow in a press conference recently said that prices would be going up due to the rise in price on global markets.

"Market participants will closely watch how quickly any such measure is implemented and whether it will go beyond just balancing the output drop from Venezuela". There was no settlement Monday for West Texas Intermediate because of the U.S. Memorial Day holiday and all trades will be booked Tuesday.

USA and global benchmark oil prices diverged on Tuesday, with concerns about a potential rise in oil supply pulling West Texas Intermediate crude down for a fifth straight session.

USA stock markets sank more than 1 percent, while the dollar wobbled at a 10-month high against the euro. Brent crude finished off the day's high of $76.20.

"There's some discord among the Gulf countries as to whether or not they should increase now or not", Kilduff said.

Oil prices decline for third consecutive on the background of statements by Saudi Arabia and Russia's readiness to increase production, a new jump in drilling activity in the United States and a record year of sales of hedge funds in the futures market. In the event that other countries fall in line with the United States and impose sanctions on Iran, supply from Iran could fall by as much as 1m/bpd.

Saudi Energy Minister Khalid al-Falih said the easing of restrictions would be gradual so as to not shock the market, noting that producing countries would soon have the capacity to liberalize supply and that this could probably happen in the second half of 2018.

"Only a few members have the capability to increase production, so implementation will be complicated", one OPEC source said.

Baker Hughes (BHGE) on Friday reported that the number of active USA rigs drilling for oil ( rose 15 to 859 in the most recent week.

Faced with a deteriorating short-term price outlook, hedge funds, which are often more sensitive to adverse price changes than longer term investors, have been cutting bullish futures bets to a ten-month low at 31,000 lots, well below the five-year average of 105,000 lots.

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