Oil prices fall on signs of ample supply despite OPEC cuts

Esequiel Farfan
May 16, 2018

Brent crude futures were at $78.17 per barrel at 0210 GMT, down 26 cents, or 0.3 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $71.09 a barrel, up 13 cents and also not far off their November 2014 high of $71.89 a barrel reached last week.

The price spread between US benchmark WTI and Brent has widened to more than $7 a barrel. EIA estimates global oil consumption-weighted gross domestic product (GDP) growth for 2018 will be at its highest rate since 2012. "Brent is pricing in the idea that all the risk to supplies is overseas - there's a concern that all the supplies that are tight in Europe are only going to get tighter".

Iran will restart its uranium enrichment if it can not find a way to save the 2015 nuclear deal with the European Union after the United States pulled out last week, Tehran's government spokesman said.

A global oil glut has been virtually eliminated, figures published by OPEC showed on Monday, thanks to an OPEC-led pact to cut supplies that has been in place since January 2017 and due to rising global demand.

Refinery runs in March also jumped to a record as import quotas for the small independent refiners-the so-called "teapots"-were increased and refinery margins stayed healthy".

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Physical crude markets are sagging under the weight of unsold barrels of oil, while the 50-percent rise in the oil price in the past year is encouraging major companies such as ExxonMobil, Royal Dutch Shell, Chevron, BP and Total to increase output.

On the other hand, USA production is growing at a pace that made traders hesitate last week after Baker Hughes reported yet another increase in drilling rigs. As the dollar strengthens, investors can retreat from dollar-denominated commodities like oil.

Crude sticking to highs as United States withdrawal from Iran program continues to boost prices.

However, experts are of opinion that the market may get some clarity and things may ease out a bit after a review meeting in June by Organisation of Petroleum Exporting Countries (Opec) and non-Opec in which they may take the decision whether to continue with cut in oil production as was pledged earlier or pump out more to make up for any shortage.

This story has not been edited by Firstpost staff and is generated by auto-feed.

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