OPEC steps up crude output to nix price rise

Lloyd Doyle
May 25, 2018

OPEC may decide to raise oil output as soon as June due to worries over Iranian and Venezuelan supply, and after Washington raised concerns the oil rally was going too far, OPEC and oil industry sources familiar with the discussions told Reuters.

A number of participants in the transaction to limit oil production of OPEC and non-OPEC should increase production in order to avoid overheating of the oil market, said on Thursday the head of "Gazprom oil" Alexander Dyukov.

The May 23 EIA report showed that stockpiles held at the biggest US pipeline hub in Cushing, Okla., fell by 1.12 million barrels, the first decline in five weeks. The oil-rich nations will also discuss ramping up production.

"If prices get above there, that will further intensify and increase the likelihood that OPEC will do something ..."

Representatives of OPEC and other major oil producers convened May 22 before the group's main meeting next month to review the impact of production cuts.

In the meantime, Russian Federation and Saudi Arabia could potentially ease their own oil production caps in an effort to keep prices under control. The collapse of Venezuela's economy and increased USA sanctions is likely to hamper already depressed output from the Opec member. "It's going to be very hard to overcome this level on a sustainable basis before the OPEC meeting". India's oil minister recently expressed his concern about higher prices to his Saudi counterpart Khalid Al-Falih. "But generally we intend to continue the cooperation", Novak said.

US crude oil exports dropped by more than 800,000 barrels a day (BPD) last week, to roughly 1.75 million barrels a day (MMBPD).

Distillate inventories decreased by a million barrels last week and remain in the lower half of the average range for this time of year.

CBC quoted Doug Porter, economist for the Bank of Montreal, as saying that in Canadian terms West Texas Intermediate is now trading as high as $91 per barrel, and "that's up 50 percent from just eight months ago".

As the daily chart below shows, the price remains within a rising channel in place since mid-April but a slide towards the channel support line seems possible after those two successive failed attempts to top $80, which is seen as an important level psychologically.

Other reports by Iphone Fresh

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