Oil slides after US Paris pact withdrawal

  • Oil slides after US Paris pact withdrawal

Oil slides after US Paris pact withdrawal

"OPEC went out of their way to ensure no one was surprised and then you get a market that wanted to be surprised", Standard Chartered strategist Paul Horsnell said.

Rystad Energy has predicted that United States oil production could hit an all-time high of 10 million barrels per day before the end of 2017. USA commercial crude inventories decreased by 6.4 million barrels last week, maintaining a total us commercial crude inventory of 509.9 million barrels. This production cut was supposed to boost crude oil prices to the $50 range, which it did.

All dynamics are factored in: The IEA's growing outlook for global oil demand, the now confirmed OPEC and Russian production cuts, and a robust outlook for USA production growth. "Demand growth has slowed somewhat recently, and with USA production growing strongly, there doesn't seem to be much room for OPEC production to grow in 2018".

Citigroup Inc. said in a report earlier this month that OPEC's warnings of an impending shortage are "overstated and misleading", while the growth of unconventional supplies like shale is "unstoppable" unless prices drop below $40 per barrel; the bank added that deep water production could grow by more than 1 million barrels per day (bpd) by 2022.

Post-settlement, prices pared some losses as data from the American Petroleum Institute (API) showed crude inventories fell by 8.7 million barrels in the week to May 26 to 513.2 million, compared with analysts' expectations for a decrease of 2.5 million barrels.

The cut, which was to end in June, pushed the low all-time-low price to 50 dollars per barrel. The U.S. rig count rose by 2 to 722, extending an 11-month drilling recovery to the highest level since April 2015.

The deal, supported by 600,000 bpd in cuts from non-members such as Russian Federation, is a global effort to reduce bloated stockpiles of crude oil and raise low prices.

Still, oil markets received some support from official US data that showed the country's crude inventories fell sharply last week as refining and exports surged to record highs. Oil prices are down around 10 percent since the decision, and OPEC officials have since suggested they may deepen the cuts. Falih, however, said after OPEC's meeting that the IPO did not affect the decision to extend the duration of the supply cut.

John Redwood, Charles Stanley's chief global strategist, said: "10 years ago the USA produced 5.1m barrels of oil a day". Production fell about 1 million barrels per day over the next year and a half as oil prices collapsed. Consumption of gasoline, however, was down slightly - less than1 percent - to about 9.6 million barrels a day.

Tankers loaded 122 million barrels of Iraqi crude at ports in the Persian Gulf and Mediterranean Sea last month, according to vessel-tracking and shipping agent data gathered by Bloomberg.