Published: Fri, July 20, 2018
Finance | By Claude Patterson

Oil prices fall amid record United States output, stockpile build

Oil prices fall amid record United States output, stockpile build

Iran is India's third-largest oil supplier after Iraq and Saudi Arabia. Russian Federation and Saudi Arabia are helping Trump's cause by increasing their supply so it will be a challenge for bullish traders to overcome resistance on the basis of increased gasoline demand.

OPEC+ Increases. Saudi Arabia, which detests Iran, has already begun to violate OPEC limits and pump oil to keep prices down.

The U.S. signaled on Monday that it could consider waivers in some cases for countries who need more time to wind down purchases of Iranian oil, with U.S. Treasury Secretary Steven Mnuchin saying that "We want people to reduce oil purchases to zero, but in certain cases if people can't do that overnight, we'll consider exceptions".

"The build brings current stocks to around 1.8 percent below the five-year of EIA data, in from over 4 percent below the week prior", James Bambino, the managing editor for the Oilgram Price Report from S&P Global Platts, said in an emailed statement. Some countries such as China have rejected USA calls and Japan is seeking a waiver.

Such a tactic was employed during Mahmud Ahmadinejad's presidency, when Iran struggled with global sanctions.

The analysis also found that petroleum demand with the U.S.is at its strongest since 2007. Brent crude, the index for oil prices, could whip from today's price of just above US$70 a barrel to $250 a barrel.

A Reuters survey of Opec production showed Saudi output at a near record, up 700,000 bpd at 10.70 million bpd. The Organization of Petroleum Exporting Countries said in its July report that non-OPEC suppliers were contributing to supply growth and on Wednesday, the USA government announced domestic production hit 11 million barrels per day for the first time ever.

U.S. crude stocks rose by 5.8-million barrels last week, compared with a forecast of a decline of 3.6-million barrels.

Russian energy giants Rosneft and Gazprom have also started talks with the oil ministry of Iran to potentially sign deals worth up to US$10 billion, the Iranian adviser said, while a Russian government official confirmed to FT Russia's US$50-billion investment plans.

So, they continue to import oil just as before.

There's still some discord within OPEC and its partners over how much oil should be added to the market.

It was reported an increase to the number of active oil and gas rigs by 2 in the United States last week with oil rigs staying at 863 and gas at 189. The Saudis and Russians said they would implement an increase of about 1 million barrels a day, but Iran, which is seeing customers flee because of USA sanctions, insists it should be much less.

Oil prices reversed early losses Wednesday after the market digested government data that showed a surprise build in USA crude inventories, but also indicated bullish demand for gasoline. Prices yesterday dropped 32 cents to US$72.58. Over the past four weeks, motor gasoline product supplied averaged 9.6 million barrels per day, down by 0.1 percent from a year ago.

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