OPEC's oil cap on Libya, Nigeria is premature - Kuwait

Xavier Trudeau
Juillet 17, 2017

Brent crude futures, the worldwide benchmark for oil prices, were at $49.08 per barrel at 0126 GMT, up 17 cents, or 0.35 per cent, from their last close.

Oil prices inched up on Monday, supported by a slowdown in the growth of rigs looking for crude in the United States and because of strong refinery demand from China.

However, crude oil price broke its streak of seven consecutive higher daily highs, falling to $46.10/b on Friday.

Brent crude futures rose 0.6 per cent to $47/b while USA crude oil futures were yesterday up 0.7 per cent at $44.51/b.

Bharat Petroleum Corporation Ltd could buy USA light crude in a tender on Friday as they are priced competitively against African oil, the company's head of refineries Ramachandran said.

Opec and the non-cartel members party to the deal will meet in Russian Federation on July 24 to review the deal's effects.

Two days after (Thursday), oil prices were higher after evidence of stronger demand balanced reports of higher production by key OPEC exporters in a downbeat report by the International Energy Agency. Brent crude rose 63 cents, or 1.3 percent, to $48.37/b by 2:40 p.m. ET (1840 GMT) while US light crude ended the day's session up 59 cents, or 1.3 percent, at $46.08/b, CNBC reported.

In Asia, China's refinery activity indicates strong demand. OECD stocks are still 266 million barrels above the five-year average, the IEA said.

He said representatives from Libya and Nigeria had been invited to a technical OPEC/non-OPEC committee meeting on July 22 ahead of the ministerial gathering, to give presentations on production from both countries.

The report also said oil demand grew in Iran, Iraq, UAE and Qatar, with transportation fuels, notably jet fuel and gasoline, dominating the increase in all countries.

A ministerial committee from OPEC and non-OPEC countries, which is headed by Gulf OPEC member Kuwait, meets in Russian Federation on July 24 to discuss compliance with the cuts, from which Nigeria and Libya are exempted due to years of output-sapping unrest.

OPEC said its production rose by 393,000 bpd in June to 32.611 million bpd, thanks to extra output from Nigeria and Libya.

In an effort to eradicate a supply glut, the Organization of the Petroleum Exporting Countries is curbing output by 1.2 million barrels per day (bpd) until March 2018, while Russian Federation and other non-OPEC producers are cutting half as much.

The cuts were planned for six months and extended for three.

The country produced 3.792 million bpd and 3.774 million bpd in April and May respectively, according to OPEC's secondary sources. And due to the abundant supply, the price of oil now stands at currently less than $50 per barrel, around a third of the level of 10 years ago, when it topped a high of $147.

"There are some encouraging signs that things are getting better for crude, last weeks healthy stock draws in the USA and the rig count slowly but surely not increasing at the rates they were earlier on in the year, but fundamentally we are still in an oversupplied market", said Matt Stanley, fuel broker with Freight Investor Services (FIS).

"The market is having difficulty picking its head up", said Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut.

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