Tuesday, 17 July, 2018

'US to become global leading producer of crude oil'

Oil steadies as drilling increases in tight market Oil mixed on Canadian supply outage, Saudi output hike
Nellie Chapman | 14 July, 2018, 08:00

On Wednesday, Brent had slumped $5.46 or 6.9 percent.

Oil prices rallied on Thursday, recouping some ground following sharp losses the previous session after Libya said it would resume oil exports. As is always the case with Libya, the situation is fluid, and any return of production does not come with a guarantee that it will be sustained.

Supply risks look to be worsening, with a strike curtailing oil production off Norway for the first time in six years.

Two geopolitical developments in recent weeks-U.S. sanctions on Iran and the escalating U.S.

A decision on what to do about imports from Iran by China and India, who together bought about 1.4 million barrels a day of Iranian crude over the past three months, will probably have a larger impact on the broader oil market.

However, there was speculation that Saudi Arabia, which has about 18 percent of the world's proven petroleum reserves, would tap into its spare capacity of 2 million barrels per day to add more oil to the markets, while USA shale production also remained robust.

On Tuesday, Sec. Pompeo seemed to strike a different tone.

Still, analysts doubt that the United States will be able to easily find alternative buyers for the oil it has been selling to China. Higher gas prices can leave USA households with less money to spend on other products. "In our meeting with the Saudi energy minister, we discussed maintaining a well-supplied oil market to guard against volatility", the unnamed official told reporters, according to Reuters.

An oil pump jack is seen at sunset near Midland, Texas, U.S., May 3, 2017.

Fears that a U.S. "Why buy Malaysian crude [linked to Brent] if your [US crude] alternative is dollars cheaper", a sweet crude trader at a trading house said, adding that WTI Midland, Bakken and Eagle Ford were some of the USA grades being offered into Asia.

In addition, in a report published on Wednesday, OPEC downplayed concerns about whether or not it could handle the tightening oil market.

The increase also comes as OPEC forecast global oil demand will surpass 100 million barrels per day (bpd) next year.

Even if demand remains strong, OPEC production will be more than enough to satisfy the market.

Meanwhile, one other factor led to the selloff in crude prices on Wednesday.

The spectre of tariffs on a further $200 billion of Chinese goods sent commodities lower along with stock markets, as tension between the world's biggest economies intensified. The tariffs are only proposed, for now, and wouldn't take effect for two months.

Among Iran's major oil clients, South Korea and Japan have sought waivers but China, India and Turkey have indicated they may not heed United States measures.

USA oil prices jumped on the news, but later retreated, though were still above the day's lows.