Oil prices decline amid rising output


Crude oil futures for September ended down $1.10, or 1.6%, at $67.66 a barrel on the New York Mercantile Exchange.

Initially, the OPEC+ members agreed on a combined cut of 1.8 million bpd but lower production by a number of countries in fact made the cuts deeper, raising fears of global oil shortages and a potential spike in the oil prices as a result.

Meanwhile, according to EIA, U.S. crude oil production was 10.9 million barrels per day which was 100,000 barrels per day lower than the previous week.

Brent crude futures were last down 33 cents at $72.06 a barrel by 12:00pm GMT, while USA crude futures fell 55 cents to $67.11.

Saudi Arabia, Russia, Kuwait and the United Arab Emirates have increased production, as agreed at a meeting in June, to help to compensate for an anticipated shortfall in Iranian crude supplies once US sanctions come into force later this year.

After the market closed Tuesday, the American Petroleum Institute reported domestic crude oil inventories swelled by 5.6 million barrels last week, compared to a draw forecast by S&P Global Platts.

The cartel and its allies - known as OPEC+ - decided in June to increase production in response to consumers' concerns over rising prices and supply disruptions, so traders and investors have been watching Russia's oil data closely.

Crude oil prices turned sharply lower ahead of the start of trading on Wednesday in NY after a surprise build in crude oil inventories in the United States.

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Crude stocks at the Cushing, Oklahoma, delivery hub fell by 1.3 million barrels, EIA said. USA crude futures slumped last month by the most in two years, and traded just below $68 a barrel yesterday on the New York Mercantile Exchange. Crude oil production is now expected to average 11.8 million bpd in 2019. That's equivalent to about 11.21 million barrels a day.

The question regarding Iranian oil supply now is, can the Trump Administration get everybody else except China, which has already said it won't recognize USA sanctions on Iran, out of the market, according to the strategist.

In the statement on Wednesday, a day ahead of monthly oil and gas output data publication, Novak said that Russian Federation was pumping on average 40,540 bpd less in July compared to October 2016, a cut-off month for the OPEC+ deal.

Despite the decline, China "continues to hold the mantle as the leading Asian destination for USA crude", said the firm's commodity research director, Matt Smith.

Concerns about demand from China also increased Friday as state oil major Sinopec cut its purchases of US crude.

The overhang in light, sweet crude is compounded by a surge in USA exports into Europe as Washington's trade war with Beijing prompts traders to divert cargoes they once hoped to sell to China.

U.S. President Donald Trump sought to ratchet up pressure on China for trade concessions by proposing a higher 25 percent tariff on $200 billion worth of Chinese imports, his administration said on Wednesday.