Oil price fall to $75 pb on rising supply by US

Galtero Lara
Junio 15, 2018

USA crude output has risen nearly 30 percent in the last two years to 10.9 million bpd, and is now close to top global producer Russian Federation, which churned out 11.1 million bpd in the first two weeks of June, and above top exporter Saudi Arabia, which produced slightly more than 10 million bpd.

The price of Brent crude peaked in May at $80.50 a barrel, then pulled back, trading on Wednesday near $77 a barrel, partly in anticipation that the deal may end. "And that really caused the euro to take a dip and the (U.S.) dollar to go up, which is putting downward pressure on prices", said Phil Flynn, analyst at Price Futures Group in Chicago.

Trump tweeted on Wednesday: "Oil prices are too high, OPEC is at it again".

The export plan comprised 48 cargoes, compared with 60 cargoes and a daily rate of 1.796 million bpd in June, due in part to an outage on the Bonny Light stream, which has been under force majeure for a month. The country boosted production after the US lifted sanctions related to Iran's nuclear program in 2016, but analysts expect output to fall when the Trump administration's decision to withdraw from the deal takes full effect later this year. Trump tweeted on April 20.

In the letter, the senators said a run-up in oil prices is "effectively a tax on every American family's discretionary budget" since the price of oil directly affects the price of gasoline. "According to sources close to OPEC, Venezuela and Iraq are also not in favor of raising production".

Even if the supply gap, triggered by the return of USA sanctions on Iran and a major political crisis in Venezuela, is plugged, the oil market will likely remain vulnerable to disruption next year, the IEA warned.

Trump's tweet - similar to one he wrote in April, blaming OPEC for "artificially Very High" oil prices - came a week before a much-anticipated OPEC meeting in Vienna and may have been created to influence the discussion.

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Pradhan's meeting with the envoys of OPEC (Organisation of Petroleum Exporting Countries) follows India's talks with China on Monday for an oil alliance, during which one of the proposals on the table envisaged Indian refiners buying equity crude directly from Chinese companies with stake in overseas projects instead of the spot market.

"Prices will be above $150 in less than two years", he tweeted on Wednesday.

OPEC is under scrutiny in Congress, too. Bob Goodlatte, R-Va., said shielding a cartel like OPEC "makes a mockery of US antitrust law, threatens the American economy and has the potential to harm our national security".

United States oil and gas is already flowing to India. "Adjusted for inflation, these prices are not out of line with where we've seen oil prices for the last decade or two".

Charles Schumer, the leader of Senate Democrats, recently linked $3-plus gasoline to Trump's decision to revive sanctions on Iran.

The measure would have to pass the full House and the US Senate before Trump could sign it into law.

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