Markets

Brent gains after reaching one-month low on supply concerns

Brent gains after reaching one-month low on supply concerns

On Friday, Opec's third-largest producer Iran criticised a USA request that Saudi Arabia pump more oil to cover a drop in Iranian exports and predicted that Opec would not heed the appeal.

The US requested Saudi Arabia to keep oil prices and supply stable after the imposition of sanctions on Iran.

Venezuela, a member of the Organization of the Petroleum Exporting Countries (OPEC), is struggling to meet its supply obligations, with dozens of tankers waiting to take on its oil. The American Petroleum Institute was said to report nationwide crude inventories declined by over 2 million barrels last week.

Saudi Arabia revealed that although oil prices have increased to over $80 per barrel, the market has yet to recover.

OPEC, and Saudi Arabia specifically, have assured in recent weeks that they would address "consumer and market anxiety" if need be, as gasoline prices around the world reached their highest in four years. Since then, prices have receded about 8% as the Organization of Petroleum Exporting Countries and its allies flirt with the possibility of easing their supply curbs as US shale producers continue to pump record volumes.

The US government has asked Saudi Arabia and a number of other OPEC members to increase their production by around one million barrels a day, Bloomberg reported yesterday, citing anonymous sources. However, the deal will expire at the end of this year.

"Nevertheless, growing prospects for an increase in production from the "OPEC Plus" and rising oil output from the USA will cap price gains".

'All systems go' for Donald Trump, Kim Jong-un's summit
That was followed by a surprise and rapid diplomatic thaw that survived Trump's abrupt cancellation of the summit late last month. Brisbane retiree Raymond Ferguson is secretary for the Australia Democratic Republic of North Korea Friendship Association.

But Opec is signalling it could increase output, and the danger of a global trade war has just bubbled up again as a threat to demand.

OPEC supply tends to more directly influence Brent, whereas US crude futures are tied to USA supply.

The group and Russian Federation are due to meet at its headquarters in Vienna on June 22 to discuss production policy.

Three sources familiar with the matter said a senior United States administration official had called Saudi Crown Prince Mohammed bin Salman before Trump's announcement to make sure Washington could count on Riyadh, the de facto OPEC leader. US oil production is up 1.5 million bpd from a year earlier. "The 2017 oil demand in Africa and the Middle East grew by around 100,000 b/d, as compared to 2016, while oil demand declined in Latin America for the third year in a row", said the report.

Crude oil prices are continuing to diverge as global benchmarks rise relative to land locked WTI.

Technically, the RSI below 20 suggests that oil is oversold and needs to retrace back a bit before giving us further selling.

"OPEC will not accept such a humiliation". With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High!


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