Iraqi oil minister silent on output, awaiting outcome of OPEC committee meeting

A massive output cut was a massive way on skimping over the oil supply glut last week which steered prices on a 10-month low. Decreased domestic production in 2016 led the U.S.to import more from OPEC in 2016, but at 40 percent, OPEC's share of USA crude oil imports is the second-lowest on record.

The economists comments come in the context of the Organisation for Petroleum Exporting Countries (OPEC), having previously announced that its members would cut production in order to force the price upwards.

To offer a backdrop, the Opec in its May meeting made a decision to extend output cuts until March 2018.

Frustration about the slow pace of market re-balancing will continue to weigh on prices going ahead as well.

Rising U.S. production has undermined some of the impact of the OPEC-led cuts. The Opec believes that deal will bring inventories back in line with upper range of five-year averages. Opec has exempted Nigeria and Libya from the curbs, leaving them free to ramp up output that had been sapped by local unrest.

A Bank of America (BofA) Merrill Lynch research study has cut the average Brent forecasts to $50 this year and $52 per barrel (/bbl) next year, from $54 and $56/bbl before.

Iraq is the second-largest OPEC supplier of medium oil. The production data showed that the production from Libya was much stronger than expected and this pushed the oil prices through $45 and then for a couple of weeks, the oil inventory data from the U.S. showed a clear build up in the inventory when a draw was expected and this added to the pressure on the oil prices.

Prices were already rebounding after official data released Wednesday showed total USA crude production dropped by 100,000 barrels a day last week, though some analysts saw the fall as a temporary in the wake of a storm that passed through the Gulf of Mexico. Brent Crude Oil price at London's IСE Stock Exchange up by 2.58% to $48.94 per barrel. The mood turned more two week ago, when the International Energy Agency's June monthly market report showed a net build in OECD oil stocks over January-April, and projected more of the same for May based on preliminary data. Venezuela provided the United States with about 271 million barrels of oil in 2016. Since January 2017, shale production has started to edge up and is now nearly back near its peak. Of course, that is entirely due to the decline of oil prices.

Markit and ISM are both slated to release June figures for their manufacturing indexes this morning.

  • Anthony Vega