Published: Sat, July 21, 2018
Money | By Bruce West

Crude Prices Rise Marginally, But One Trader Insists A Rebound Is Imminent

Crude Prices Rise Marginally, But One Trader Insists A Rebound Is Imminent

Saudi Arabia's governor to the Organization of the Petroleum Exporting Countries (OPEC) says the kingdom's oil export will be little changed this month, dealing a setback to US President Donald Trump who had pinned hopes on Saudis to reduce oil prices in global markets.

Brent crude futures had fallen 21 cents, or 0.3 per cent, to $72.69 a barrel by 0615 GMT.

He added that Saudi Arabia's total supplies to the market are poised to drop by 100,000 bpd in August compared with July.

Mr Al-Aama said Saudi Arabia's policy is to work on satisfying customers' needs, but to do so while adhering to Opec and non-Opec supply agreements.

But the spectre of oversupply quickly returned, with a rise of more than 600,000 barrels in US crude stockpiles, reported by the American Petroleum Institute late on Tuesday.

Prices have been dragged down by concerns about oversupply as some production returned after outages, while trade tensions between the United States and China stoked fears of damage to their economies and commodities demand. This making traders nervous because it suggests not only a trade war, but a currency war may be brewing.

WTI crude oil prices built on overnight recovery move from near one-month lows and edged higher through the early European session on Friday.

But high oil prices are only a temporary problem.

The Energy Information Administration reported U.S. crude inventories rose by 5.84 million barrels last week, confounding most analysts in a Bloomberg survey who were forecasting a decline.

The US and her allies aren't helping because low oil prices mean fracking to produce shale oil has suddenly become profitable and weaning America off dependence on OPEC.

US refiners ran full-tilt in the second quarter, fueled by cheap domestic crude and fat margins that should boost earnings, though their heavy activity could eventually saturate the market with gasoline, sapping profits down the road.

US drillers this week cut five oil rigs, the most since March, according to a Baker Hughes report, with the rate of growth slowing over the past month with recent declines in crude prices. Many countries are seeking a USA pardon to continue importing Iranian oil.

Prices had gained earlier after the Energy Information Administration reported gasoline held in USA storage tanks dropped last week by the most since May on the back of strong fuel demand, countering a surprise gain in nationwide crude inventories. The market will right itself once it realises that there will not be a shortfall in oil, even if Iran's oil exports drop from 2.7 million barrels per day (bpd) to 1 million bpd, as they did under the last period of strong economic sanctions between 2013 and 2015.

According to the statement on Thursday from the Energy Ministry, which cited Saudi Arabia's liaison to OPEC Adeeb Al-Aama, exports for this month as a whole will be in line with June's levels, and will decline by 100,000 barrels a day in August. That would mean a roughly 1 million bpd increase in output.

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