Markets

Oil jumps as Qatar ditched, London attacks hurt sterling

Oil jumps as Qatar ditched, London attacks hurt sterling

Oil markets rose around 1 percent on Monday, pushed up by tensions in the Middle East where top crude exporter Saudi Arabia and other Arab states cut off ties with Qatar.

Oil prices fell to their lowest level in a month on Wednesday after commercial crude stocks in the USA increased surprisingly against market expectations. A separate report showed that U.S. oil production has reached 9.34 million barrels per day for the week ending on 26th May, which is the highest level of production since August 2015.

Sterling GBP=D3 fell as much as 0.3 percent before paring the losses to trade down 0.2 percent at $1.2868 on Monday. That confounded forecasters who had predicted a drop of 3.5 million barrels, especially a day after data from the American Petroleum Institute indicated an even bigger fall.

Refinery crude runs fell by 283,000 barrels per day, EIA data showed.

Government figures revealed that United States oil and product stockpiles jumped last week, wrong-footing traders who had been expecting a drop in crude inventories.

On the New York Mercantile Exchange crude futures for June delivery rose 0.26% to 45.84 a barrel, while on London's Intercontinental Exchange, Brent gained 0.33% at $48.22 a barrel.




USA crude production has jumped over 10 percent since mid-2016 to 9.34 million barrels per day (bpd), levels close to top producers Russian Federation and Saudi Arabia. Meanwhile, market analysts anticipated a 3.1M-barrel decline during the reported week. Some were already concerned about rising production from Libya and Nigeria, which are exempt from the agreement.

By comparison, 24 countries including Saudi Arabia and Russian Federation made a pact in late May to keep 1.8 million barrels a day off the market through the first quarter of next year.

"We believe that United States inventories will continue falling this summer, allowing Opec to point to lower stocks as a positive measure of success", Sandy Fielden, director of oil and products research at Morningstar, said in a note. The global benchmark crude traded at a premium of $1.75 to WTI, the lowest since February.

Crude oil prices remained under pressure in Wednesday trading as geopolitical issues in the Persian Gulf lead to questions about OPEC unity.

Oil has struggled to stay above $50 a barrel amid speculation that rising US output will counter supply curbs by the Organization of Petroleum Exporting Countries and its partners, including Russian Federation.


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