Meanwhile, the Energy Information Agency (EIA), in its short-term forecast published on July 12, forecasts the country’s production in 2018 to reach 9.9 million barrels per day, which is lower than the June estimate of 10.01 million barrels. The exemption was granted to allow both countries to rehabilitate oil infrastructure that had been sabotaged by militants in recent years, giving them leeway to rehabilitate their industries.
“There is strong demand for our crude but we are sticking to our Opec commitments”, the source, who is familiar with the kingdom’s oil policy, said on Wednesday. With U.S. oil producers leading a pick-up in rival supply, that’s also higher than the 32.2 MMbpd OPEC expects will be needed in 2018. What we are now seeing is a pullback in shale oil production that will hold back USA oil output of shale until the economics start to make more sense.
“OPEC news remains mixed, with Saudi Arabia raising production while reducing exports to meet increased domestic demand”, Ole Hanson, the head of commodity strategy at Saxo Bank, told UPI.
Brent crude futures rose 22 cents, or 0.5 percent, to settle at $47.74 a barrel, while U.S. West Texas Intermediate (WTI) crude gained 45 cents, or 1 percent, to settle at $45.49.
According to the data from the American Petroleum Institute (API), US crude stockpiles decreased by 8.133 mln bbl in the first week of July compared to the previously expected inventory draw of 2.99 mln bbl, thus exceeding the initial oil demand expectations roughly threefold. The restrictions had been introduced in 1975, two years after OPEC banned oil sales to the USA, a move that sent gas prices skyrocketing.
That has been a pattern for several months, with many traders still skeptical of a changing market because USA production is rising and stockpiles aren’t falling as quickly as some expected. This is the second consecutive monthly oil production increase of the cartel. According to OPEC, the average for 2015 stood at 1.839 million barrels per day. On Tuesday, it said the USA would pump 9.9 million barrels a day. Led by Libya and Nigeria, which are not in the list of oil output cut deal. Volumes of oil stored at sea are increasing not only around Singapore, but also in the North Sea, with ship-tracking sources indicating a build-up of floating barrels of around 7 mb to 9 mb.
The International Energy Agency expects USA crude production to grow by 780,000 barrels per day next year.
Other Opec members also saw their output rise last month.
Furthermore, the latest accusation of Russian intervention in the US elections further strained relations with Russia, which has a long history of tension since the Cold War era.