Commodity Blog

Commodity news, technical and fundamental analysis, market data on precious metals, energies, industrial metals, and soft commodities

Archives

Oil Makes Slight Gains Amid Output Concerns and Increased OPEC Supply

June 26, 2018 at 15:47 by Matt Jackson

Oil prices have made slight gains on the day, with news of potential supply disruption from Libya, and as investors continue to weigh up the OPEC+ deal that was announced over the weekend. The continued threat of an escalating trade war between the US and the EU has prevented prices from rising further, however, as there remains a threat that oil could face additional taxes and tariffs. Both WTI and Brent benchmarks made slight gains, although prices have been up and down all day.

Libya handed control of oil ports to the National Oil Corporation, which is based in the East of the country. Eastern Libya commander, Khalifa Haftar, said that the Libya based National Oil Corporation, which has the same name but is a different organisation, will no longer be allowed to handle the oil. However, Tripoli holds the only rights to export oil in the country, which means that Libya’s supply could be locked in and will not be available to the global market. Libya currently produces around 1 million barrels per day, and is a member of the OPEC cartel.

OPEC agreed, at the weekend, that they would increase their current supply levels, but the details of the increase have received mixed reviews. Countries like Russia and Saudi Arabia agreed to restrict their oil production levels until the end of this year. In recent months, however, they have restricted even more than previously agreed. Under the new announcement, the group has said that they will, now, meet their self imposed targets, representing an increase in supply of only around 600,000 barrels per day; less than expected and a long way short of the shortfall that will be caused by sanctions against Iran and Venezuela.

Also playing on the market is the continued escalation of a trade dispute between the US and the rest of the world. Having imposed tariffs on steel and aluminum, the USA has seen countries across the world retaliate with similarly sized tariffs on their exported goods. The EU is the latest region to introduce such tariffs, and President Donald Trump has threatened to respond by increasing tariffs on EU automotive goods. There is a possibility that tariffs will be introduced on oil, which would mean end prices would increase and demand would drop. This threat has pegged prices back and prevented much bigger gains.

WTI crude prices have risen by 0.88% to $68.68 while Brent crude prices have increased 0.17% to reach $74.68 at 16:30 GMT.

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

Leave a Reply

required
required  

Navigation

Menu