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Rising OPEC Oil Production Hurt Prices

July 21, 2017 at 18:50 by Vladimir Vyun

Crude oil sank more than 2% today on the forecast that supply from the Organization of Petroleum Exporting Countries is going to increase. Petro-Logistics estimated that OPEC production will grow by 145,000 barrels per day in July, rising above 33 million bpd. That added to doubts about effectiveness of production cuts that the OPEC and some non-OPEC oil-producing countries implemented last year. The oil producers will meet in Moscow next Monday to discuss the output cut deal, and traders will watch closely the outcome of the gathering.

On a positive note, Baker Hughes reported that the number of US oil rigs decreased by 1 this week. The report followed the data released by the Energy Information Administration earlier this week that showed bigger-than-expected drawdown from US oil stockpiles. The news eased concerns that growing US production will worsen oversupply on the market. Some analysts, though, put the news in a negative light, saying that reduces incentive for the OPEC to deepen production cuts.

Contract for delivery of WTI crude oil in September sank 2.58% to $45.71 per barrel on NYMEX today. Futures for Brent crude tumbled 2.45% to $48.09 per barrel on ICE.

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