Oil Trades Low as OPEC+ Brawl Stokes Supply Uncertainties
Oil trades low on Thursday amid market disarray as supply uncertainties continue after the Organisation of Petroleum Exporting Countries and allies (OPEC+) countries failed to agree on their production quotas from August onward.
International benchmark Brent crude was trading at $73.11 a barrel, falling by 0.43% from $73.43 a barrel. American benchmark West Texas Intermediate (WTI) was at $71.78 per barrel at the same time for a 0.58% decrease after it ended the previous session at $72.20 a barrel.
The dispute among OPEC+ members occurred after the UAE objected to the group’s plans to boost output by 400,000 barrels per day (bpd) from August to December.
The group also wants to prolong the term of its production cut agreement, which was inked in October 2018, from April to December 2022. Positive industry data that predicts a massive drop in the US crude oil inventories did not encourage lower prices.
The American Petroleum Institute predicted that US oil stocks would fall by 8 million barrels, compared to the market expectation of a drop of 3.9 million barrels.
The US International Energy Administration, which released its July Short-Term Energy Outlook (STEO) on Wednesday, expressed “uncertainties” over the path of global oil demand in the comings months but yet was optimistic that the recent increases in crude oil prices along with the OPEC+ decision to raise production would help meet the expected increase in global oil demand.
US Crude Oil Stocks Extend Slide, Drop 8 Million Barrels
In a new report, US crude oil stocks including those in the Strategic Petroleum Reserve fell by 8 million barrels in the week ended July 2 following a decrease of 8.1 million barrels in the previous week.
Excluding inventories in the SPR, crude oil stocks fell by 6.9 million barrels after a 6.7 million barrel decrease in the previous week, a larger drop than the 4 million barrel decline expected in a Bloomberg survey.
Stocks in the SPR fell by 1.2 million barrels in the week after a 1.4 million decline in the prior week. Overall crude oil stocks were down 0.7% from the previous week and 10.7% below the comparable week a year earlier. Crude oil inventories are about 7% below the five-year average for this time of the year.
Gasoline stocks fell by 6.1 million barrels, much more than the 1.8 million barrel decrease expected. Gasoline stocks were down 2.5% from the previous week and 6.4% from a year earlier.
Distillate stocks rose by 1.6 million barrels compared with an expected increase of 0.2 million barrels. Distillate stocks were up 1.2% from the previous week but were still 21.8% lower than in the same week a year ago. Refineries operated at 92.2% of capacity, down from 92.9% in the previous week.
Oil Trades Low as OPEC+ Brawl Stokes Supply Uncertainties
