United States oil production seen thwarting OPEC effort to boost prices

Reuters

The International Energy Agency (IEA) anticipates the global oil market will remain oversupplied into 2018 due to rising USA oil production and failure of some OPEC members to comply with production targets.

Oil prices edged higher on Tuesday after Opec detailed supply cuts around the world, but the cartel also said overall production rose in May, and crude stayed well below US$50 a barrel despite the modest recovery. The IEA's initial projection for global oil demand in 2018 is for it to grow by a healthy 1.43 million barrels a day, faster than this year and not far short of 2016's big gain.

The Paris-based IEA said production outside the Organisation of the Petroleum Exporting Countries (Opec) would grow twice as quickly in 2018 as it will do this year, when Opec and 11 partner nations have restrained output.

But in what would presumably be a positive development for OPEC, a Reuters analysis of hedging disclosures by the 30 largest USA shale companies shows that most stayed on the sidelines in the first three months of this year, compared to a year ago when they rushed to lock in prices even though oil was trading $15 per barrel lower.

Israel to reduce power supply to Gaza
Though Israeli politicians have argued for changing policy toward UNRWA, Netanyahu appears to have finally done so. Every month, Israel would dock money from that transfer to cover the cost of electricity supply in Gaza.

Qatar crisis will have a very little impact on global oil prices as the country is not a major producer of Oil.

US interest rates futures rose after the weak data, suggesting traders reduced their bets on a possible third Fed interest rate increase in 2017.

July gasoline RBN7, -4.11% was down 4.2% at $1.437 a gallon on the New York Mercantile Exchange, while July West Texas Intermediate crude CLN7, -3.64% lost 3.8% to $44.70 a barrel. All of the ETF's components were trading in the red, led by a 6.2% decline in shares of Transocean Ltd. and a 5.1% fall in Murphy Oil Corp.

More specifically for oil, there are signs of a slowdown in China, long the key component of fuel demand growth, as its economy slows.

Boris Johnson denies plot to topple UK PM Theresa May
The Sunday papers are filled with anonymous sources briefing that Foreign Secretary Boris Johnson is considering a leadership bid. This would give the Tories the numbers to pass a Queen's Speech on Monday 19 June, which will set out their legislative agenda.

Fesharaki believes that Saudi Arabia and its allies will have to deepen their cuts if they want to provide any support to crude oil prices.

"Demand for OPEC crude in 2017 was revised up by 100,000 bpd from the previous month".

Traders said market intelligence firm Genscape had forecast a draw down of more than 1.8 million barrels at the Cushing, Oklahoma delivery point for USA crude futures.

"Not only are [U.S.] producers increasing spending more sharply than initially thought, the pace and duration of new rig additions and drilling activity has exceeded all expectations", it added.

Qatar says Saudi-led move to bar citizens breach of rights
The dispute comes less than a month after Trump visited Saudi Arabia and called for Muslim nations to unite against "extremism". Saudi Arabia, the United Arab Emirates, Egypt and Bahrain made the announcement on June 5. "The Saudis had had it with Qatar".

Meanwhile, the EIA has reported that shale production in the US would reach an all-time high in July, at 5.475 million bpd and adding an additional rig to bring the total rig count to 719, continuing the twenty-two-week streak.

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