Oil falls as investors brace for output increases

Sean Reid
May 30, 2018

West Texas Intermediate for July delivery fell as much as US$2.08 to US$65.80 a barrel on the New York Mercantile Exchange and traded at US$66.79 at 3.55pm in Tokyo.

Rising U.S. crude production also weighed on the market.

In April, pact participants cut production by 52 percent more than required, with falling output from crisis-hit Venezuela helping OPEC deliver a bigger reduction than intended.

Reacting to comments from the Saudi oil minister, crude oil prices have fallen more than $5 per barrel in the past few days.

Record crude oil volumes from the United States are expected to head to Asia in the coming months.

This was in contrast to US crude production surging by more than 27% in the last two years, to 10.73 million barrels per day (bpd), bringing its output ever closer to Russia's 11 million bpd, according to Reuters.

The drop in oil prices is welcome news for drivers, as well as companies and countries that buy a lot of energy.

USA oil production C-OUT-T-EIA has surged by more than 20 percent in the past two years to 10.7 million bpd. What's going on in the global oil market to trigger this decline, which is welcomed the world over by energy consumers?

Barkindo also said it was not unusual for the United States to put pressure on OPEC as some US energy secretaries had asked the producer group to help lower prices in the past.

Next month's meeting of the Organization of the Petroleum Exporting Countries (OPEC) is being touted as key to the outlook for crude oil prices, but a strong indication of what's likely will come next week.

"The market was not prepared for Opec to get ready to return supply that soon", said Jens Naervig Pedersen, a senior analyst at Danske Bank A/S in Copenhagen.

The creation of the Strategic Petroleum Reserve (SPR) is founded on a number of joint global studies, according to the DOE-Oil Industry Management Bureau. There was no settlement Monday because of the U.S. Memorial Day holiday and all trades will be booked Tuesday. So far, the cartel has gone where Saudi Arabia has wanted it to go, some more willingly than others, but still together, as higher prices are generally good for oil-dependent economies.

There is also reason to be bullish for the fact that, according to some analysts, the additional supply that OPEC and Russian Federation plan to bring online would "barely" compensate for the loss of production from both Venezuela and Iran.

Already, Cusi has tasked the Philippine National Oil Company-Exploration Corporation (PNOC-EC) to prepare for oil trading and retail to provide competition to existing oil industry players and pacify domestic oil prices. U.S. President Trump last month criticized OPEC for contributing to higher crude.

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