Oil output could return to Oct'16 level, says Russia's Novak

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"A 5.8 million-barrel build is kind of like a slap in the face, where it's like, 'Where did this oil come from?' And as you look through the numbers, it doesn't make a lot of sense", said Phil Flynn, analyst at Price Futures Group in Chicago. Trading at $79.80 on Wednesday, the global benchmark Brent crude fell sharply over the next two days, closing Friday trade at $76.44, driven by the prospect of an increase in supply by Russian Federation and the Organization of the Petroleum Exporting Countries (OPEC).

Sources familiar with the matter said an increase of about 1 million bpd would lower compliance to 100 percent of the agreed level.

The American Petroleum Institute (API) reported a draw of 1.3 million barrels of US crude oil inventories for the week-ending May 18, compared to analyst expectations that this week would see a draw in crude oil inventories of 1.567 million barrels. In October 2016, Russia's oil output reached a 30-year high of 11.247 million bpd.

"I think I was prodded by his excellency Khalid Al-Falih that probably there was a need for us to respond".

Despite oil's losses Friday, analysts at Société Générale raised their forecasts for oil prices. The United States in February produced 10.3 million bpd, a record.

Venezuela's output has fallen amid an economic crisis, while Iran's supply is threatened by US sanctions.

Limiting the upward pressure on prices is rising supply in the U.S., where shale production is forecast to hit a record high in June.

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The difference between 861,542 in 2016 and 869,666 in 2017 works out to a 0.94 percent increase. Census Bureau says Chicago's population has decreased for the third consecutive year.

The increase in USA inventories came from a combination of reduced exports and rising imports.

It was also in 2016 that Russian Federation - now the world's single largest producer of crude oil - and OPEC agreed to tighten the supply of crude as a step to reduce the glut of inventory and to push prices up.

The final production number is not set yet as dividing up the extra barrels among deal participants could be tricky, the sources said.

"Oil prices are now starting to drift a little", said Greg McKenna, chief market strategist at futures brokerage AxiTrader, adding that this was due to Organization of the Petroleum Exporting Countries (OPEC) and Russia´s "moves toward an increase in production" at a meeting scheduled for next month.

Under current conditions of improving fundamentals of supply and demand, met with a decline in OPEC production and a potential USA embargo, oil prices experienced a 75 percent rise since last summer's rate.

"If sanctions are introduced against Iran, most of the OPEC producers would like to be pumping more oil, particularly giving the higher prices".

Concern about a potential drop in Iranian oil exports following Washington's exit from a nuclear deal with Tehran and the threat of United States sanctions is also supporting prices.