World

Oil prices slip as physical supply glut overpowers OPEC

Oil prices slip as physical supply glut overpowers OPEC

"The lack of a positive response in oil prices clearly suggests market participants are not convinced that the OPEC's efforts will help shore up prices in a meaningful way in the short-term as shale supply continues to rise in the USA", said Fawad Razaqzada, market analyst at futures brokerage Forex.com.

Elsewhere, Brent oil for August delivery on the ICE Futures Exchange in London dipped 18 cents to $44.64 a barrel, after hitting $44.35 in the prior session, a level not seen since November 14.

Oil held its slide into a bear market amid speculation rising USA output will blunt OPEC-led efforts to trim a global glut.

OPEC output jumped 336,000 barrels per day to over 32.14 million barrels in May'17 despite 106 percent output cut compliance last month. Besides, EIA expects US crude oil production to increase through 2018, averaging 9.3 million b/d in 2017 and 10.0 million b/d in 2018.

Libya, exempt from the Opec-led output cuts, is pumping the most in four years while oil stored on tankers reached a 2017 high this month.




In their meeting last November, OPEC members unanimously agreed on the oil price of 60 USA dollars per barrel, hence they agreed to cut output by 1.2 million bpd down to 32.5 million bpd for the first six months of 2017.

Mihir Kapadia, chief executive officer of Sun Global Investments, said the energy markets are operating on a back foot due to concerns there is still too much oil despite Opec and non-Opec cutbacks.

Earlier in the United States session, the Iranian Oil Minister had suggested that OPEC could consider deeper output cuts, although this notion was rejected by other OPEC delegates. The U.S. Energy Information Administration's weekly petroleum data for the week ended June 16 showed a 2.5 million decrease in American crude oil inventories from the previous week, close to the "not insignificant" decrease of 2.7 million estimated by analysts at Commerzbank. OPEC and other producers have committed to keeping 1.8 million barrels a day off the market through March.

"Recent data points are not encouraging", Morgan Stanley analysts said in a research note. "U.S. crude and gasoline stockpiles are significantly higher compared with their five-year averages, which will weigh on prices".


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