Oil Prices Are Too High

Galtero Lara
Junio 13, 2018

Fox News contributor John Layfield on the impact of rising oil prices on the US economy.

Oil slipped after Russian Federation was said to propose that OPEC and other producers in a global alliance reverse the supply cuts they've been making since early past year.

Barely recovered from the roller coaster ride of recent weeks, traders are holding their breath for the June 22 meeting of oil ministers from OPEC member states in Vienna.

The Organization of the Petroleum Exporting Countries and some non-OPEC producers, including Russian Federation, started withholding output in 2017 to reduce a supply overhang and prices have risen by around 60 percent over the previous year.

"Saudi Arabia and Russian Federation have already started to lift production", he said. "Unofficial sources have said that Russian Federation will propose to return production back to the October 2016 (level), i.e. removing the cap altogether over a period of three months".

Pumped further by global trade war fears, oil prices have since surged to multi-year highs, only to then fall back again somewhat, the IEA said.

U.S. crude oil production for yet another week for week ending June 01-the most recent data available-increased to 10.800 million bpd, according to the EIA.

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Brent crude was trading at $75.83 per barrel, while the US WTI was valued at $66.31.

"The prospect of easing supply curbs from OPEC-led producers continues to be reflected in oil's overall depressed price", Otunuga said.

In the United States, the American Petroleum Institute said on Tuesday crude oil inventories rose by 830,000 barrels in the week to June 8, to 433.7 million. American oil production has jumped by nearly a third in the last two years to a record 10.8 million barrels per day.

With output in Russian Federation rising back above 11 million bpd in June and Saudi production climbing back above 10 million bpd, supplies from the top three producers are increasing.

"With rising production from USA shale adding to oil's woes and reviving oversupply concerns, further downside could be a possibility in the short to medium term", Otunuga said.

An oil production shortfall in Iran and Venezuela may force OPEC and Russian Federation to decide later this month to open their taps, the International Energy Agency said Wednesday.

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