Oil entered a bull market on August 18, less than three weeks after tumbling into a bear market, as prices surged partly on speculation that discussions among members of the Opec may lead to action to stabilize the market.
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” … by Venezuela’s own submitted count, its oil production has fallen from 2.587 million barrels per day (bpd) at the start of the year to 2.364 million bpd by the end of June … an admitted decline of 223,000 bpd in 6 months”.
That’s particularly relevant as the tide appears to be turning in terms of expectations for next month’s informal OPEC meeting.
Iraq on Tuesday said it was committed to freezing output when OPEC meets informally for talks with other producers in Alegria in September.
Generally, countries with sizeable financial assets, such as the Persian Gulf States (Saudi Arabia, Kuwait, Qatar, and the United Arab Emirates), are affected to a lesser degree than other oil-producing countries, such as Iraq, Nigeria, and Venezuela, that do not have large financial reserves, EIA stated. In anticipation of the storm, operators in the region have halted production.
The comments about high oil output have dampened expectations that Opec and outside producers such as Russian Federation will agree steps next month to support prices such as a production freeze, following the collapse of a similar effort in April. Exports in July averaged 3.202 million bpd.
Riyadh and Tehran remain at opposite poles of the current alliance-structure in the Middle East, with Shiite Iran lying closer to Russian Federation and the Syrian Assad regime, and the Sunni Saudis linked to the USA in both its incursions into yemen and in its support for rebel groups in Syria.
Iraq’s oil mininster renewed calls for local and worldwide oil companies in Iraq to increase production. However, Smith said the meeting could thwart those hopes for a production freeze, noting Saudi Arabia’s crude production recently hit a record high.
At 523.6 million barrels, USA crude oil inventories are at historically high levels for this time of year. Crude and product inventories showed a surplus of 175 million barrels and 136 million barrels, respectively.
On this weather disruption, crude oil prices rose further.
With the end of the driving season in Q3, 2016 in the USA, gasoline demand could see a seasonal downward correction, which would pressure oil prices. Bets on rising prices jumped to the highest in more than a year.
“Brent oil is expected to approach a support at $48.52 per barrel again, as its correction from the August 19 high of $51.22 has not completed”, he said.
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