'Opec deal does not give right to pump oil above target'

Lloyd Doyle
July 21, 2018

"The recent price divergence between Cushing-based WTI and Brent is a reminder that although Cushing is a marker for local crude fundamentals in the midcontinent, it diverges for pricing waterborne US crude".

The Trump administration is pushing countries to cut all imports of Iranian oil from November when the US reimposes sanctions against Tehran. -China trade tensions "should subside this week and could be a possible plus for oil prices", but a possible sale of US oil reserves would hurt prices. "Slowing trade growth will weigh on physical demand for oil".

OPEC and its partners could increase production by more than the 1 million barrels a day agreed under a deal last month if needed, Russia's Energy Minister Alexander Novak said. So, they continue to import oil just as before.

Trump has the authorization to release more oil and the Saudis are offering more oil as well.

Another sign the marker abounds with crude came in the form of US president Donald Trump's administration reportedly considering selling 5 million to 30 million barrels from the Strategic Petroleum Reserve into the market, as well as a larger release that would be coordinated with other nations (the USA now holds 660 million barrels of oil in reserve).

The steady upward climb that US oil production has been on throughout 2018 appears to have leveled off at 10.9 million bpd, where it has remained for five weeks now. That has oil from USA shale increasingly heading overseas.


To top it off, USA demand, while not growing at a blistering rate, has remain elevated. The report, however, noted that the next price collapse could be avoided by boosting production in countries including the United States, Angola, Canada, and Brazil.

The world's oil-consuming nations are showing growing unease about the rapidly tightening global crude oil market and are considering releasing oil from their strategic petroleum reserves.

Politicians have long argued that producing a ton of oil will free Americans from their dependence on foreign producers.

But global supply remained tight with investors wary over the impact of production losses in several exporting countries.

US oil production continues to break records, topping 10.9 mb/d in the last few weeks, an all-time high. Last month, the State Department toughened its stance, insisting that imports of Iranian crude be reduced to zero, which naturally boosted worldwide prices further.

ING said in a research note, "If Trump continues to believe that OPEC [the Organization of the Petroleum Exporting Countries] are not doing enough [to reduce oil prices], we would not rule out an SPR release from the United States, or possibly even export restrictions on petroleum products". Now relying on the bullpen to ease prices is going to fail and may discourage more oil investment.

Other reports by Iphone Fresh

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