Oil Remains Upbeat as Brent Crude Trades $77.07

16 May, 2018, 08:03 | Author: Dustin Murphy
  • Oil Prices Slip Ahead Of EIA Supply Data But Stay Near 2014 Highs

China's crude oil imports in the first quarter increased by 7 percent on the year to around 9.09 million bpd-a rise of nearly 595,000 bpd on average compared to Q1 2017, according to Reuters calculations.

Looking at U.S. crude oil stocks, the most recent EIA figures (May 9) showed falling crude oil stocks and falling gasoline inventories. Politics is at the heart of the recent increase.

The tightening market has just about solved the global supply overhang that has weighed down oil prices between 2014 and 2017. Most cartel member governments are eager to boost oil prices since their economies are highly dependent on oil revenues.

OPEC and Saudi Arabia made similar statements past year at the beginning of their initiative to curb oil production, and some pundits took this to be a way to avoid any predictions that could prove wrong of higher oil prices resulting from their cutbacks.

OPEC also stated: "the price of OPEC basket of 14 crudes stood at $74.42 a barrel on Friday, compared with $74.46 the previous day, according to OPEC Secretariat calculations". Crude oil inventories (-2.2m vs. -1.0m expected) were lower than expectations.


South Korea imported 1.24 million tonnes of Iranian crude, or 303,025 barrels per day (bpd), in April, down from 1.41 million tonnes from a year ago, according to the customs data. South Sudan oil production has fallen from 500,000 to 130,000 barrels per day.

U.S. President Donald Trump announced the dissolution of the nuclear deal with Iran and promised to impose tough sanctions against Tehran. The U.S. Energy Information Administration reported Monday that production from key shale producing regions is on track to jump by 144,000 barrels a day next month.

"Once the pipeline problems have been resolved and supply is available again, this will have a dampening effect on prices", the note said.

The Energy Information Administration said Monday that United States unconventional oil production is expected to rise 144,000 b/d in June to 7.178 million b/d. The number of oil drilling rigs being deployed is rising.

"There will be the obligation to reduce imports of Iranian crude oil and, in more general terms, sanctions on any commercial operations and transactions of the (energy) sector with Iran", the source said. "Around a million barrels of oil a day is likely to disappear from global oil markets if the US sanctions on Iran bite", said Greg McKenna, chief market strategist at futures brokerage AxiTrader.

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