Price Of Oil Is Being Hammered Down By Negative News

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On Wednesday, crude prices fell almost 4 percent after USA gasoline inventories rose unexpectedly and the International Energy Agency said growth in oil supply next year is expected to outpace demand even as global consumption exceeds 100 million barrels per day (bpd) for the first time.

The news underscored the market's ongoing struggles with weak gasoline demand in the United States, the world's top consumer of the motor fuel, and rising production, especially from US shale drillers.

Despite expectations of a drop in USA crude stockpiles, fears of rising US shale production are expected to continue to weigh on OPEC and its allies' efforts to rebalance supply and demand in the market. US West Texas Intermediate (WTI) crude futures were down 8 cents, or 0.2 per cent, at $44.38 per barrel.

But inventories are near record highs in many parts of the world, and many traders expect further price falls.

The U.S. Energy Information Administration (EIA) said gasoline inventories increased by 2.1 million barrels during the week ended June 9, while crude inventories decreased by 1.7 million barrels.

US crude settled down 27 cents at $44.46, after touching a six-month low of $44.32 a barrel.

The report also showed that gasoline inventories increased by 2.1 million barrels, compared to forecasts for a drop of 457,000 barrels.

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However, prices for both benchmarks are still down by around 13 percent since late May, when producers led by OPEC extended a pledge to cut production by 1.8 million barrels per day by an extra nine months until the end of the first quarter of 2018.

But adherence to the cuts is under scrutiny.

Kazakhstan, which agreed to cut supplies past year as part of the non-OPEC bloc, said it would reduce production in June and July after overproducing for three months in a row.

Should the recovery in Nigeria and Libya prove sustainable and others not cut more, the market could remain in surplus.

Producers outside the OPEC deal are increasing output, the International Energy Agency (IEA) said.

Growth in oil supply will outstrip growth in demand during 2018, driven by increasing production from USA shale and other countries outside Opec, the International Energy Agency (IEA) said. More specifically for oil, there are signs of a slowdown in China, long the key driver in fuel demand growth, as its economy slows down and refiners have produced far too much fuel for the market to consume, forcing a slowdown in activity.