Oil: OPEC Production Climbs As Saudi Arabia Pumps More

Oil: OPEC Production Climbs As Saudi Arabia Pumps More

Oil prices traded slightly higher on Thursday, reversing course after a report suggested crude stockpiles at the USA storage hub at Cushing, Oklahoma fell in the latest week. US crude CLc1 rose $1.30, or 1.9 percent, to $68.96 a barrel. Brent crude futures were at $73.15 a barrel, down 30c from their last close.

Saudi Arabia, Russia, Kuwait and the United Arab Emirates (UAE) have increased production to help compensate for an anticipated shortfall in Iranian crude supplies when planned U.S. sanctions take effect later this year.

US crude CLc1 was off by 5 cents at $68.91, after gaining almost 2 percent in the previous session.

In the previous week ending July 20, EIA reported a draw of 6.1 million barrels.

U.S. West Texas Intermediate (WTI) crude futures fell $1.10 to settle at $67.66 a barrel, a 1.6 percent loss.

Oil markets have been halting further declines recently after the energy commodity fell too far, too fast on pumped-up production from OPEC, and supply constraints both within the United States overseas have seen oil markets quick to buy, implying that bullish oil traders, while sidelined on rising production, are remaining close at hand.

"Oil has been rebounding every time prices fall to near $68 since mid-July", Makiko Tsugata, a senior analyst at Mizuho Securities Co., said by phone.

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The weekly estimates for May all point to more than 10.7 million bpd of crude oil production, but the more accurate-albeit lagged-data, based on survey of producers, shows that US oil output had trailed projections by around 300,000 bpd. "A lot of this is the risk premium priced in for Iran and when do we start seeing an impact on supply there", ING commodities strategist Warren Patterson said.

"There are a lot of escalation points that could occur very quickly and that worries me", Jonathan Barratt, chief investment officer at Ayers Alliance in Sydney, said.

Crude oil costs experienced their worst monthly decline in over two years in July as a multi-year high in barrel prices broke away amidst plans by OPEC and Russian Federation to boost production limits.

In addition, inventories at Cushing shrunk by 1.338 million barrels, adding to last week's 1.127 million barrels drop.

The kingdom has been under acute pressure from President Donald Trump to open the taps as he chokes off exports from Saudi's political rival, Iran.

Oil prices are feeling the effects of ongoing tensions over global trade, with markets concerned about any slowdown in growth around the world.

Meanwhile, trade war concerns have resurfaced again on reports the Trump administration is planning to propose a 25% tariff on goods worth over $200 billion imported from China, instead of the original proposal for a 10% levy. Senior Iranian officials have warned the country would not easily yield to a renewed US campaign to strangle Iran's vital oil exports. Analysts polled by Reuters had expected a decline of 2.8 million barrels.

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