• Api reports draw while market awaits EIA report

    Source: FxWire Pro - Commentary / 20 Jun 2018 10:00:55   America/New_York

    Both Brent and WTI is under pressure despite Middle East tensions as Russia and Saudi Arabia indicated that they might ease the oil production cap by a million barrels per day. WTI is currently trading at $65.9 per barrel and Brent at $9.8 per barrel premium to WTI.

    Key factors at play in the crude oil market –

    • OPEC meeting will be held on Friday and Saturday.
    • Iranian oil minister voiced his opposition to any production increase at the meeting.
    • Libyan political crisis has so far led to burning of oil tanks near Ras Lanuf oil port.
    • According to OPEC MOMR, the production was 31.87 million barrels in May, up 35,000 barrels from April. OPEC production was 31.93 million barrels per day in April, up 12,000 barrels from March, according to OPEC’s monthly oil market report.
    • According to Reuters’ survey, OPEC production is up by 70,000 barrels per day in May to 32.07 million barrels per day.
    • Russia and Saudi Arabia have signaled that they might ease the production cap by a million barrels per day after Brent reached above $80 per barrel and importers like India urged OPEC and Russia to take measures.
    • President Maduro reelected as the president of Venezuela. This increases the risk of further sanctions on the country’s oil exports. Venezuela has told foreign firms that it would not be able to meet the supply contracts.
    • President Trump moved the United States out of the Iran nuclear deal and promised to impose harshest of sanctions.
    • U.S. State Secretary Mike Pompeo laid out conditions for a new agreement with Iran.
    • Violence in Gaza could spread across the Middle East.
    • Saudi oil minister said that the world has the capacity to absorb higher oil price. Saudi Arabia plans to target $100 per barrel oil.
    • Saudi Arabia’s suggested that Russia and Saudi Arabia is looking to form a supply cartel alliance that would last not for years but decades.
    • Venezuela in crisis as oil production declined to 1.44 million barrels per day.
    • EIA projects U.S. crude production to increase to 11. 4million barrels per day by end of 2019 and U.S. would become the single largest producer by next five years.
    • Saudi corruption crackdown yielded $106 billion according to the country’s attorney general.
    • Current U.S production at 10.8 million barrels per day.
    • The oil market is in backwardation, both Brent and WTI.
    • API reported a draw of 3.016 million barrels of crude oil. Gasoline saw a build of 2.113 million barrels.

    Today’s inventory report from US Energy Information Administration (EIA) will be released at 14:30 GMT.

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