The increase adds to the challenge that the Organization of Petroleum Exporting Countries and other major producers face after agreeing in May to extend their output-cuts deal to counter a supply glut and slippage in prices. "We're seeing this reflected in the rising rig count and increases in 2017 investment plans".
The West Texas Intermediate for July delivery edged up 0.28 USA dollar to settle at 44.74 dollars a barrel on the New York Mercantile Exchange, while Brent crude for August delivery gained 0.45 dollar to close at 47.37 dollars a barrel on the London ICE Futures Exchange. Recent data suggest the two countries could add up to 250,000 barrels a day to OPEC's June output level, according to PVM Oil. Brent time-spreads between December 2017 and 2018, and then 2018 to 2019, are trading in the deepest contangos since mid-November, the most bearish structure since before OPEC agreed to cut output.
The June STEO forecasts a 2017 average spot price for Brent crude oil of $53/barrel (b), with prices increasing to $56/b in 2018.
US inventory data is one of the most visible and readily available sources of on how much oil is in storage making it a number markets watch closely.
An OCBC report noted yesterday that in December past year, Opec expected U.S. oil production to decline by 150,000 bpd but it now expects it to increase by 800,000 bpd. OPEC could not get its act together and the market lost faith in OPEC until it was finally able to agree in 2016 to cut production.
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Increases in US production of crude oil and hydrocarbon gas liquids has been the largest contributor to the 820,000 b/d of non-OPEC liquids supply growth from January through May 2017.
Iranian production is close to its maximum for now but by early 2018, and after cutting some deals with worldwide oil firms, it may be looking ahead to production gains, too.
Indications of falling demand in different regions also further weakened the crude prices. Member states Libya and Nigeria are exempt from the agreement so they can steer oil revenue toward national security efforts.
Last week, Goldman Sachs reported that the USA oil rig count increased by six making it the consecutive 22nd week in a row of oil rig addition.
In 2014, cartel leader Saudi Arabia unexpectedly raised production even as prices fell.