Global Oil Prices Edge Higher on China Data, Slowing US Production Signals

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A second reason that oil prices are starting to slowly inch up is that the USA rig count, while still increasing, is expanding at a slower rate.

West Texas Intermediate oil prices are depressed relative to Middle East benchmark Dubai because of rising US shale oil production and as the OPEC cuts have reduced the amount of Middle East medium, sour crude.

So, demand is rising faster than expected, particularly in the second quarter compared to the first, which suggests the second half the year will probably lead to stronger inventory declines.

U.S. crude oil inventories had the largest fall since September 2016.

In retrospect, the Opec's output cut was not big enough to "shock and awe" the oil bears, especially since Russian Federation pledged to cut output by a mere 300,000 barrels.

While Libya's closest frenemies within OPEC reduced their oil output to stabilize the market, the North African country could be in a prime position to snag some market share.

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Libya is looking to reach the 1-million-bpd mark by the end of July and 1.32 million barrels per day by the end of the year, which is possible keeping in mind the progress that Libya has made so far.

Crude oil prices ended each trading day last week in positive territory on signs that commercial stockpiles of oil in the United States, the world's largest oil consumer, were on the decline. My take? The world is tantalisingly near a short-term bottom in crude oil prices. Prices gained $2.31 to $46.54 a barrel last week.

The increased production in the USA and an increase in the numbers of operating rigs remain as one of the biggest of concerns for the oil bulls.

"The choices have increased and crude is available at competitive prices", said M. K. Surana, chairman of oil refiner Hindustan Petroleum Corp. And because China's domestic production has contracted substantially over the last few years, it has had to step up imports. The production has increased by 967,000 barrels per day since bottoming around last July.

Even as OPEC and some non-OPEC producers cut output to shore up prices, global oil output in June is 1.2 million barrels per day above a year ago, the International Energy Agency said on Thursday in its latest monthly report.

On Monday, oil prices have recorded as much as $49 per barrel on reports of a sharp decline in U.S. crude inventories in the week that ended last July 7. Prices climbed 4.7 percent last week.

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