Kuwait: it’s premature for OPEC to cap Libya, Nigeria oil output

Futures climbed 1 percent in NY, pushing prices to a weekly gain of 5.2 percent.

Meanwhile, analysts are looking to next week with anticipation as ministers monitoring an agreement to cut production from the Organization of Petroleum Exporting Countries meet to review its impact. Doubts on the effectiveness of the group’s deal to reduce output remain, even as USA crude and gasoline stockpiles drop.

Weekly data from EIA shows that total U.S. oil production is close to 9.4 million bpd, the highest since August 2015. Despite falling prices, United States companies are actively investing in shale oil production, causing uncertainty in the market.

In general, crude moves down the supply chain from areas of net production to areas of net refining and consumption (“Oil inventories become more visible”, Reuters, May 17, 2017).

H2 demand is expected to be 1-2 million bpd higher than H1, and this should support the above-mentioned trends, which in turn should support further USA inventory draws. The culprit has been a combination of weaker demand growth and higher production from US shale producers as well as Libya and Nigeria, which are exempt from OPEC’s output reduction efforts.

Ecuador ranks 12th in terms of total oil production among member states, churning out about 527,000 barrels per day in June.

US futures rose 44 cents, or 1 percent, to $46.84 a barrel as of 10:59 a.m. EDT (1459 GMT), compared with $46.70 a barrel prior to the release. Prices advanced 38 cents to settle at $46.40 Tuesday. Prices climbed 4.7 percent last week. Three years ago, in July 2014, Brent crude traded at $110 a barrel, on the eve of an epic crash that saw the price of the world’s preeminent light sweet crude benchmark plunge to $28 a barrel by February 2016.

Gold’s next major resistance lies around 1240.00 and then 1247.70, the 100-day moving average. Gasoline demand over the past month averaged about 9.7 million barrels per day, down by 0.8%.

On Monday, oil prices have recorded as much as $49 per barrel on reports of a sharp decline in USA crude inventories in the week that ended last July 7.

Gasoline stocks fell by 5.4 million barrels, compared with expectations in a Reuters poll for a 665,000-barrel decline. For the same period, an S&P Global Platts survey of analysts had consensus estimates for a decrease of 3 million barrels in crude inventories, a decrease of 700,000 barrels in gasoline inventories, and a rise of 500,000 barrels in distillate stockpiles.

“I do expect a modest draw in crude”, James Williams, an economist at London, Arkansas-based energy-research firm WTRG Economics, said by telephone. “There hasn’t been any real strong political news or strong fundamentals to drive us either way”. Exports of refined oil products in May fell to 1.279 million bpd, from 1.455 million bpd the month before, the data showed. In these range-bound conditions, it is hard to predict with a high degree of confidence where oil prices will be heading using technical analysis alone.