Published: Thu, May 03, 2018
World News | By Laverne Osborne

Trump's Decision on Iran Has Oil in Holding Pattern

Trump's Decision on Iran Has Oil in Holding Pattern

Prices fell after the U.S. Energy Information Administration reported a surprise build of 6.2 million barrels in the week-ending April 27. The price discount makes US crude more competitive around the world.

Saudi Aramco, which is state-owned producer, announced on Wednesday that it has raised the June price for its Arab Light grade by 70 cents a barrel for Asian customers versus May to a premium of $1.90 a barrel to the Oman/Dubai average.

Looking at USA crude oil stocks, the most recent EIA figures (April 25) showed rising crude oil stocks and rising gasoline inventories.

"We'll see what happens", Trump said about his decision on the Iran deal. Distillate stockpiles slumped by 3.9 million barrels, versus expectations for a 1.4 million-barrel drop, the EIA said.

The US oil production also reached a record of 10.62 million barrels per day, rise of over a quarter since the middle part of 2016.

Exports have averaged 1.9 Mbd over the past four weeks, a 152 percent year-over-year increase.

As for the Energy Information Administration's earlier news that crude stockpiles rose by 6.2 million barrels in the week, previously jittery traders are now taking solace in the fact that 5 million barrels of that build was concentrated on the USA west coast. The 52-week range on June futures is $44.54 to $69.55. Weekly figures are considered less reliable, and the industry relies more on monthly data; the EIA on Monday said production in February rose to a record 10.26 million bpd, which ranks it second in the world behind Russian Federation.

The trick, according to Kemp, is guessing the price at which demand destruction begins.

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July Brent futures were down 16 cents at $72.97 a barrel by 1100 GMT, after falling almost 3 percent on Tuesday to their lowest in two weeks. Production at Rosneft, the largest Russian oil company, inched up by 0.1 percent in April over March, while Gazprom Neft-which has an ambitious production growth plan-saw its oil production increase by 0.9 percent month on month.

"There's some potential risk for that number to be lower just because of infrastructure restraints in the Permian Basin, and that's where the bulk of US oil growth has taken place this year", he says.

USA distillate stocks fell 3.9 million barrels last week to 118.829 million barrels, EIA data showed, while analysts had expected a draw of 1.3 million barrels.

The distillate fuel product supplied averaged 4.2 million barrels per day over the last four weeks, up by 0.1 percent from the same period previous year.

In 2017, an average 56 percent of China's crude oil imports came from OPEC producing members.

Michael Poulsen: That's one option at least and also the Saudi's have some spare capacity but it's likely it will take a little bit of time to get everything up and running to account for a million barrels a day, it's quite a hefty thing to lift from one day to the next, so there will likely be some overlapping period where those facilities are being used. Ohio's average sits at $2.75.

Here is a look at how share prices for two blue-chip stocks and two exchange traded funds reacted to this latest report.

Likewise, China has a voracious appetite for oil and may not wish to do Trump any favors in the midst of its trade spat with the United States, Wittner said.

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