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Oil Prices Retreat Following Jump in US Production

June 14, 2018 at 15:44 by Matt Jackson

Oil prices have fallen in late Thursday trading, despite reaching two-week highs earlier in the day. The drop could be attributed to the Energy Information Administration’s report. While the report showed a drop of 4.1 million barrels of oil, it also highlighted an increase of 100,000 barrels a day in US production, reaching a weekly record of 10.9 million barrels a day.

The market is also likely to be waiting for the outcome of the OPEC meeting, which is scheduled for June 22, and will see the warring sides of OPEC decide whether you continue curbing their output levels or increase supply in order to make up for the shortfall from Iran and Venezuela, both of whom will face US sanctions.

OPEC meets on June 22. Their main order of business will be to debate whether to continue curbing oil output, or to relax the restriction and pump more oil into the global market. Several countries, including both Iran and Venezuela, have openly stated that they would not agree with a decision to increase supply, instead preferring to continue with the current agreement, which is not set to expire until the end of this year.

However, it is believed that Russia and Saudi Arabia, the two biggest suppliers, would look to increase supply. In fact, Saudi Arabia has already increased its own supply levels in recent weeks, and it has been reported that delegates for US President, Donald Trump, unoficially approached Saudi Arabia to ask them if they would be willing to increase supply in order to meet the shortfall caused by Iranian sanctions.

The EIA report was initially treated as good news, and the market responded to the fact that stockpiles had endured a huge drop with a daily increase in Wednesday’s trading. The increase continued early today, but oil prices have since retreated. WTI crude has fallen 0.26% to $66.47 while Brent crude has slipped 0.93% to $76.03 at 16:30 GMT.

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