Oil rises slightly after Saudi says it will make significant cuts

WTI Crude Oil

WTI Crude Oil

Kazakhstan is a party to the original production agreement struck by OPEC and 11 non-OPEC producers past year, committing to shave off 20,000 bpd from its total daily production. "What we can influence as oil producers is the fundamentals, the level of supply which will result in drawing down the inventories".

"Crude oil is still struggling to rebound", said Olivier Jakob, strategist at Petromatrix, adding that OPEC's gradual approach to rebalancing was giving USA producers time to drill new wells that were undermining the impact of the group's cuts. U.S. West Texas Intermediate (WTI) crude futures gained 30 cents, or 0.7 percent, to $46.13, having peaked at $46.71.

As OPEC limits supply, America is simply grabbing a larger share of the market. USA oil and gas exploration and production analyst Gabriele Sorbara of Williams Capital said in a recent interview with TheStreet that oil names have been trading out-of-favor and will likely continue to do so over the next few months.

A sign of ample supplies is the Brent forward curve, which is in a shape known as contango, in which crude for delivery in half a year's time is around $1.50 per barrel more expensive than that for immediate dispatch, making it profitable to charter tankers and store fuel instead of selling it for direct use.

The output increases come even as the cartel is trying to convince market participants that its cuts are reducing the size of a glut that has weighed on the market for almost three years.

Bearish sentiment has taken hold of crude oil prices as various analysts and agencies have slashed their forecast for this year and next.

Some members of the oil cartel such as Libya and Nigeria are exempted from the cuts. Seasonally, Saudi Arabia's exports are lower over the summer when its domestic demand for power peaks.

Oil prices were trading lower this afternoon.

Asked when oil prices may begin to serve as a drag on markets, Kinahan said, "You start getting to 44.5 and that opens up 40 quickly".

The last time this happened, in mid-2014, preceded a massive selloff in oil that dropped Brent from $108 a barrel to about $47 a barrel in the span of five months. Last week, Baker Hughes reported 11 additional rigs operating in the USA, up 513 from this time previous year.

OPEC chatter tends to emerge when oil prices are under strain. Russia also has favorable tax regimes and exchange rates (Russian company expenditures are in Russian Rubles, but oil sales are in U.S. Dollars) that resulted in record levels of Russian petroleum production in the second half of 2016.

Oil prices continued to gain ground during the U.S. session on Monday, but were unable to sustain the best levels with WTI hitting selling interest above the $46.50 p/b level.

Recommended News

  • Ivanka Trump says her father is optimistic

    Ivanka Trump says her father is optimistic

    Sessions said his decision to accept the intelligence committee's invitation to appear was due in part to Comey's testimony. During his own testimony last week, Comey said that he understood Trump's request "to be a directive".

    EU to launch action against 3 countries over refugee plan

    Polish Deputy Foreign Minister Konrad Szymanski said " Poland is ready to defend its standpoint before the Court of Justice ". Hungarian Foreign Minister Péter Szijjártó said: "The Commission's actions are of political rather than of legal nature".

    A Year on, Orlando Shooting Victims Remembered With Love and Rainbows

    Similar messages were shared across the country, including early Monday morning at the site of the terror - the Pulse Nightclub. Orlando Police Chief John Mina, Mayor Buddy Dyer and Orange County Mayor Teresa Jacobs also attended the private service.
  • French Open for THU JUNE 8

    After he broke Murray at the start of the fourth set to raise his hopes of a comeback, Nishikori immediately lost his serve. Murray said: "Obviously for a couple of points after that I was sacked up, because I was frustrated at that moment.

    Incidents targeting Muslims drove rise in hate crimes in 2015: StatsCan

    New government statistics show that hate crimes reported to police increased by five per cent in Canada in 2015. Overall, 48% of all police-reported hate crimes in 2015 were motivated by hatred of a race or ethnicity.

    Donald Trump Jr. May Have Accidentally Confirmed Part of Comey's Testimony

    The president did not provide any evidence to back up his claim about more leaks from Comey, whom he fired on May 9. Comey said he instructed his friend, a Columbia law professor, to give the memos to The New York Times.
  • AG Rosenstein sees no reason to fire Mueller

    That, to me, is the smartest thing to do, the best thing to do, and that's what I think hopefully will happen. And Rosenstein said Mueller could not be fired without his personal assent.
    Chouhan calls off fast

    Chouhan calls off fast

    Mandsaur , the epicentre of farmers' protest, had been on the boil since last week. Five farmers died on the spot and one more succumbed to his injures on Friday.

    IOS 11 Details- Best Features From the New Apple Operating System

    Now that Android has fairly decent capabilities with respect to multitasking, Apple had no choice but to put this on iOS 11 . Other big addition to Siri is a new translation feature that lets user translate English words to other languages.
  • America's Cup: New Zealand hold final lead after Swedish skipper goes overboard

    The Kiwi helmsman claimed a 2-1 lead in the Challengers Series finals after Artemis lost their skipper to Bermuda's Great Sound . Skipper Russell Coutts handed the wheel to Barker, his understudy, for the clinching fifth race.
    Bella Hadid Goes Braless for Oh-So-Chic Parisian Lunch Date

    Bella Hadid Goes Braless for Oh-So-Chic Parisian Lunch Date

    It's a great quality for runway or editorial, but "in the real world" Hadid looks like she's perpetually in costume. In terms of make-up, a subtle sweep of rose-hued blush and berry gloss enhanced her natural beauty.

    E3 2017: Nintendo Announces 'Metroid Prime 4' For Switch

    Nintendo Switch Starter Kit Pro accessoryThe Starter Kit Pro is an evolution of the company's best-selling Switch accessory. Specific battle-cars and customisation items such as Mario and Luigi hat toppers would be exclusive to the Nintendo Switch.

We are pleased to provide this opportunity to share information, experiences and observations about what's in the news.
Some of the comments may be reprinted elsewhere in the site or in the newspaper.
Thank you for taking the time to offer your thoughts.