TODAY.AZ / Business

Oil prices fall amid weak decline in U.S. oil reserves

03 August 2017 [12:40] - TODAY.AZ

By Azernews

By Sara Israfilbayova

World oil prices declined on August 3 on the backdrop of data from the U.S. Department of Energy on commercial oil reserves in the country.

Brent crude futures, the international benchmark for oil prices, are down 0.4 percent, at $52.16 per barrel, U.S. West Texas Intermediate (WTI) crude futures are at $49.40 per barrel, down 0.4 percent, Reuters reported.

The U.S. Department of Energy reported that commercial oil reserves in the U.S. (excluding the strategic reserve) for the week ended on July 28 fell by 1.5 million barrels, or by 0.3 percent - to 481.9 million barrels. Experts expected a greater decline - by 0.61 percent, or 2.957 million barrels, to 480.443 million barrels.

Investors are waiting for signals that the volume of oil production in the OPEC + countries will decrease and will affect the still remarkably high global supplies. ANZ [the Australia and New Zealand Banking Group Limited] forecasts a decrease in production in the fourth quarter, which is expected to push prices much higher than $50 per barrel.

“A strong increase in demand was enough to appease the bullish investors,” ANZ Bank told to Market Watch.

However, the International Energy Agency’s (IEA) July report reads that, OPEC countries increased oil production by 393,500 barrels per day in June, as compared to May - up to 32.611 million barrels per day, despite the agreement of cartel members and countries outside OPEC to reduce production.

Trading data in Thomson Reuters Eikon shows that crude oil shipments by OPEC and Russia, which excludes pipeline supplies, hit a 2017 high of around 32 million barrels per day in July, up from around 30.5 million barrels per day in January.

The OPEC+ Technical Committee is set to hold meetings in Abu Dhabi on August 7-8, chaired by Russia and Kuwait, with some participants of the agreement on the reduction of oil production in order to discuss the fulfillment of their obligations under the deal.

Some smaller producers, such as Ecuador, have voiced their dissension, saying they don’t have enough economic resources to keep sidelining production.

OPEC and other major oil producers agreed in December 2016 to remove 1.8 million barrels a day from the market. 

OPEC has decided to extend its production cuts till March 2018, as the oil cartel and its allies step up their attempt to end a three-year supply glut that has savaged crude prices and the global energy industry.


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