Recap: After reaching a two-month high on Monday, oil prices fell more than 2% during Tuesday’s session on growing skepticism that OPEC was incapable of cutting enough production to support prices. According to a Reuter’s survey, OPEC production climbed in July to its highest level since December 2016. A post settlement sell-off came after the release of the API numbers, which showed an unexpected build of 1.8 million barrels in U.S. crude oil inventories.
Oil futures experienced an outside trading session, as it surpassed Monday’s high and low, before paring losses. September WTI settled at $49.16 a barrel, down $1.01, or 2.01%. Brent for October delivery fell 94 cents, or 1.78%, to settle at $51.78 a barrel.
Fundamental News: Bloomberg reported that crude oil stocks held in Cushing, Oklahoma fell by 700,000 barrels to 55.1 million barrels in the week ending July 28th.
Reuters reported that OPEC’s oil output in July increased by 90,000 bpd to a 2017 high, led by a further recovery in supply from Libya, one of the countries exempt from a production cutting deal. A fall in Saudi Arabia’s supply and lower exports from Angola helped to increase OPEC’s adherence to its supply cuts to 84%.
Russia’s Energy Ministry reported that the country reduced its oil output in July by 307,600 bpd from its production level in October 2016.
Iraq’s Oil Ministry reported that the country’s crude oil exports fell to 3.23 million bpd in July from 3.273 million bpd in June as no shipments were made from the northern Kirkuk field. Iraq generated $4.13 billion from oil sales in June and sold its crude for $42/barrel.
Iran’s news agency SHANA reported that the country’s oil exports in July increased by 45,000 bpd on the month. Iran exported 2.2 million bpd of oil in July to Asian and European markets, with exports to Asia increasing by 100,000 bpd.
According to Bloomberg, observed crude exports from Libya increased by 11% on the month in July. A total of 42 cargoes loaded from Libyan ports in July, totaling 26.8 million barrels or about 865,000 bpd. This is compared with 781,000 bpd in June.
JBC Energy reported that OPEC’s output in July increased by 210,000 bpd to 32.87 million bpd. OPEC compliance with its target cuts fell to 93% in July from 94% in June.
Cargo-tracking company, Kpler, said OPEC’s exports in July increased to a 2017 high of 26.68 million bpd. The gains were led by Libya, Nigeria and the UAE.
According to cFlow, Platts’ trade-flow software, expected arrivals of distillates into Europe and the Meditteranean from the US Gulf Coast in August to reach about 1 million metric tons. About 340,000 metric tons of distillates left the US Gulf Coast for Europe and the Mediterranean in the past seven days, down from about 500,000 metric tons the previous week.
BP expects global oil prices to hold within a range of $45-$55/barrel next year as US shale production increases. Following a slow start to the year, global oil demand recovered in the second quarter of 2017 and was expected to grow by 1.4 to 1.5 million bpd.
Bloomberg reported that preliminary US waterborne crude imports fell by 1.7 million bpd to 4.2 million bpd in the week ending July 27th. The Gulf Coast saw the largest decline of 869,700 barrels to 2.48 million bpd, while imports to the West and East Coasts fell by 359,800 bpd and 472,000 bpd, respectively. Total crude and product imports fell by 2.06 million barrels to 5.9 million bpd.
Early Market Call - as of 9:00 AM EDT
WTI - Sep $49.25, up 8 cents
RBOB - Sep $1.6620, up 7 points
HO - Sep $1.6509, up 97 points
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