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Oil Creeps Up After News of Stockpile Decline

June 13, 2018 at 16:07 by Matt Jackson

Oil prices have risen on news that the USA Energy Information Administration (EIA) has reported a decline of 4.1 million barrels for the week ending June 8. Analysts had predicted a decline of more than 2 million barrels, but the actual decline turned out to be much higher. News that Iraq, OPEC’s second biggest oil producer, does not want to boost supply levels has also had an impact on the price, and has caused US President, Donald Trump, to once again accuse OPEC of controlling prices.

It emerged recently that President Trump had unofficially asked Saudi Arabia to increase their oil supply if his administration withdrew from the Iran nuclear deal. It looked as though the Middle Eastern oil producer had listened to the request, having increased their supply levels, but there are known to be two factions within OPEC. Iraq, Iran, and Venezuela have openly stated that they oppose any move to increase output levels, while many political and market analysts believe that Saudi Arabia and Russia were prepared to increase their supply levels. It is noteworthy that two of the nations opposed to increasing supply are Iran and Venezuela, both of whom are set to be hit with biting US sanctions that will all but prevent them from selling to the market.

Fresh from his summit with North Korean dictator, Kim Jong Un, Trump has jumped straight back into the oil debate. Having previously accused OPEC of artificially manipulating prices, he tweeted:

Meanwhile, GlobalData reported a few days ago that Venezuela’s oil exports could disappear if they continue to deplete at their current rate. Adrian Lara, Oil and Gas Analyst at GlobalData, said “Crude oil production in Venezuela is practically falling at an average of 10% every quarter and has been since mid-2017” and also said that their production levels could be as low as 1 million barrels per day by the end of 2018, compared to the 3 million barrels a day they were producing in 2011.

WTI crude rose 0.32% to $66.57 while Brent crude rose 0.70% to $76.41 at 17:00 GMT.

If you have any questions and comments on the commodities today, use the form below to reply.

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