Published: Mon, June 04, 2018
Finance | By Cynthia Curry

Russian Federation 95% compliant with OPEC+ oil output deal in May - energy minister

Russian Federation 95% compliant with OPEC+ oil output deal in May - energy minister

“The report was supportive due to the large drop in crude oil inventories which was a function of a trifecta of bullish elements: strong demand from refiners, a sizeable drop in crude oil imports, and rebound in exports, ” said John Kilduff, a partner at Again Capital LLC in NY.

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower early Monday. For the week, WTI was on track to drop about 3 per cent, adding to last week's near 5 per cent decline.

There is some evidence to suggest that this has happened in recent weeks, with vessel-tracking data compiled by Thomson Reuters Oil Research and Forecasts pointing to record arrivals of US crude in Asia in June.

At 434.5 million barrels, US crude oil inventories are in the lower half of the average range for this time of year.

Analysts predict oil prices set to increase again after seeing a resurgence Thursday with Brent crude climbing to $78, but will most likely not reach the $100 mark.

Crude oil futures erased earlier losses on Friday but the United States benchmark price was set to lose ground for the second week, squeezed by record United States production and expectations of OPEC boosting output.

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Over the first four months of 2018, oil production in Kazakhstan totalled 30 million tonnes, 6 percent higher as compared to the same period previous year. That was a rise of 215,000 barrels a day (bpd) over the 12 months.

During the said week, Organization of Petroleum Exporting Countries (OPEC)'s basket price stood at $76.41 per barrel with 65 cents increase compared to the preceding week. Surging output and a lack of pipeline capacity in the prolific Permian Basin shale play in Texas is exacerbating swelling USA inventories. It also estimated that OECD crude oil inventories had fallen 20 million barrels below the five-year average for the first time since the output cuts began.

"The fall is quite natural at this stage, as it's still only guesswork on how much OPEC and Russian Federation will increase production - that has calmed down the market a bit, but the fact is that they're looking at bringing production back to 100% compliance, replacing Venezuela and Angola's losses, and that leaves the market still tight", head of commodity strategy at Saxo Bank, Ole Hansen, said.

The speculator group cut its combined futures and options position in NY and London by 50,937 contracts to 370,980 during the week to May 29, the U.S. Commodity Futures Trading Commission said.

Russia's largest oil producer Rosneft says it will be able to restore 70,000 barrels per day (bpd) of oil output in just two days if global production limits are lifted.

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