Trump, OPEC, and the Oil Market's Razor Thin Spare Capacity

Trump, OPEC, and the Oil Market's Razor Thin Spare Capacity

Abu Dhabi said it's ready to increase oil output in line with guidance set by OPEC and allied producers, echoing comments by Saudi Arabia that it will boost supply to meet demand. This must be a two way street. United States light crude was down 40 cents at $73.75.

Trump's claim comes after the Organization of the Petroleum Exporting Countries (OPEC), a grouping of oil-producing states that includes Saudi Arabia, already agreed to ramp up production by a million barrels a day at a meeting earlier this month. NY. "all eyes will be on that Cushing number".

OPEC's oil production in June increased by 320,000 bpd from May to stand at 32.32 million bpd, as the cartel's biggest producer Saudi Arabia produced close-to-record volumes, according to a monthly Reuters survey tracking oil supply to the market. Crude pared its losses late in the session, turning positive on market sentiment that supply disruptions would not resolve faster than previously expected.

Morgan Stanley raised its Brent crude forecast to $85 a barrel through to the third quarter of 2019, citing a tighter market than previously anticipated.

"Bulls are regaining control", said Tamas Varga, an analyst at PVM Oil Associates in London.

Prices swung wildly. Light, sweet crude for August delivery traded in the morning at the highest level since November 2014, before reversing course and falling more than 1%. The OPEC quota in this agreement is 1.2 mln barrels. There was no settlement on Wednesday because of the holiday.


US West Texas Intermediate (WTI) crude futures were up 57 cents, or 0.8 percent, at $74.51. That's what we're doing. But those moves may be tempered by an equal desire by the United States and other country for stable oil prices. If confirmed by government data Thursday, that would be the seventh consecutive drop.

Crude inventories fell by 4.5 million barrels in the week to June 29 to 416.9 million, compared with analysts' expectations for a decrease of 3.5 million barrels. "We are also working with oil market participants, including producers and consumers, to ensure market stability".

Oil prices climbed on Tuesday after Libya declared force majeure on some of its supplies, although an overall rise in OPEC output and an emerging slowdown in demand held back markets.

After the U.S. withdrew from the Iranian nuclear deal in May, it said it would reimpose economic sanctions against Tehran by November.

Separately Venezuela's distressed oil industry may get some much-needed financing from China, receiving authorisation for a direct investment of more than $250 million from China Development Bank for its state-owned oil company to increase production.

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