Published: Thu, May 03, 2018
World Media | By Cesar Oliver

Oil edges up despite record U.S. crude output

Oil edges up despite record U.S. crude output

Reuters reported that OPEC oil output fell in April to a one-year low due to declining production in Venezuela and lower shipments from African producers, a Reuters survey found, sending compliance with a supply-cutting deal to another record.

Presently, Angola is suffering sharp declines at under-invested offshore fields, with output dropping nearly three times as much as the nation pledged in an accord with fellow OPEC members. The market is trying to determine whether the symbolism-laden meeting can eventually lead to a deal with the USA, finally resolving the escalating nuclear tension on the peninsula.

On Monday, US President Donald Trump said that Israeli PM Benjamin Netanyahu's revelations about Iran lying on its nuclear project show he's "100% right" about the Iranian nuclear agreement. "The growing supply uncertainties are the key reasons why we believe the oil market has priced in a risk premium".

The approaching May 12 deadline and the very real possibility that President Trump will not grant Iran another waiver has kept fuel prices supported in recent weeks.

A strong dollar makes dollar-denominated oil more expensive to holders of other currencies.

Unintended supply disruptions are rife in the cartel. US West Texas Intermediate crude futures dropped 1.06% to $67.84 a barrel. While the USA continues pumping record amounts of crude, Goldman Sachs sees a "moderate" response to higher prices from American shale producers and an increasing likelihood that the Organisation of Petroleum Exporting Countries and allies will extend their supply cuts through next year.

United States oil production rose to a record of 10.62-million bpd, putting it ahead of Saudi Arabia, the biggest Opec producer.

Russian Federation pumped a total of 10.97 million bpd of oil in April, unchanged from March, and slightly above its quota under the production cut deal, according to energy ministry data, as carried by Reuters.

Meantime, U.S. oil exports also hit a record high, a sign that the shale boom will continue to lead to higher shipments overseas, despite some infrastructure bottlenecks. Sentiment has also been bullish in physical markets, where Dubai and Malaysian crudes in April traded at their highest prices since November, 2014 at $68.27 and $75.70 per barrel respectively.

"If that happened, Brent prices could jump to near 90 dollars (a barrel)".

However, the rising value of the dollar since mid-April.DXY and soaring USA supplies have helped check further oil price gains, traders said. Iran had quickly boosted its oil production by about 1 million barrels per day after the implementation of the deal in January 2016. We expect bunker prices may continue slight upward evolution next week.

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