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Oil prices drop on potential increase in OPEC output

27 May, 2018, 01:20 | Author: Melinda Barton
  • Нефть Brent торгуется выше 78 долларов за баррель

Allaying fears of a steep rise in oil prices, OPEC countries have chose to step up production of crude oil.

Global oil prices fell Friday after top producer Saudi Arabia signalled a likely boost in supply as soon as the third quarter, and world stock markets were mixed over the sudden United States move to cancel the summit with North Korea.

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.

Such a decision is possible because of fears about a possible decrease in the supply of raw materials from Iran and Venezuela, which contributed to the growth of oil prices to the highest levels since 2014.

This comes even as USA crude production has risen.

Based on the prospect of a shortfall in supply relative to demand, investors had driven their bets on a sustained rise in the price of oil to record highs earlier this year.

At a time when India is looking at ways to keep rising fuel prices in check, a further increase in the per barrel price of crude oil (the deciding factor of domestic oil prices) may bring more pain for consumers in the future.

Tuesday evening the American Petroleum Institute (API) reported that crude inventories fell by 1.3 million barrels in the week ending May 18.

U.S. crude and distillate stockpiles fell last week, while petrol inventories increased unexpectedly, data from industry group the American Petroleum Institute (API) showed on Tuesday.

Septembers ' contractual price on oil on the Shanghai global energy exchange (INE) on Friday have decreased on 1,1% - to 479,9 yuan per barrel. Venezuela has been producing about 500,000 barrels a day less than its quota under the OPEC production cuts, and more USA sanctions could cut that number even further. US refineries produced about 10 million barrels of gasoline a day last week, down by about 500,000 barrels compared to the prior week.

USA crude added 24 to $72.48 per barrel and Brent rose 17 cents to $79.33 on Monday (May 22).

Concern about a potential drop in Iranian oil exports following Washington's exit from a nuclear deal with Tehran and the threat of USA sanctions is also supporting prices.

Saudi Arabia and other major OPEC producers could in theory add more supply, but have yet to do so. U.S. West Texas Intermediate (WTI) crude futures eased 21 cents, or almost 0.3 percent, to $71.99 a barrel, having climbed on Tuesday to $72.83, also the highest since November 2014.

Distillate inventories saw a draw this week of 1.3 million barrels versus a forecast for a decline of 1.335 million barrels.



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