Oil prices drop amid Middle East geopolitical tensions

Brent Slips Below $50

This decision has so far proved unsuccessful in convincing a wary market that the producer group's efforts to clear the glut of oil in storage are honest, as prices remain below US$50/b.

The Energy Information Agency (EIA) reported in the previous week that crude inventories in the United States declined by 6.43 million barrels. It expects 2018 daily output to hit 10 million barrels, exceeding the previous record of 9.6 million barrels a day in 1970.

Nigeria will maintain it's output of 2.2 million barrels per day, according to the outcome of the Organisation of Petroleum Exporting Countries (OPEC) meeting in Vienna."If anything, the simple extension begs questions about what happens next March and what OPEC's long-term strategy is for combating rising US production and a prolonged global supply glut, to get prices back above $60", he said. "They are operationally relatively flexible and ready to take advantage of higher prices".

Brent crude prices were at $48.40 per barrel, down 3.4%, or $1.72 a barrel.

Oil prices across the globe were on the rise on Monday - a direct impact of the tensions in the Middle East - and an effect of the production cut by OPEC. "But if, as we have already seen, higher refinery runs and/or crude exports are the causes of these inventory drawdowns, then the impact on Opec's balancing act is actually negative". Late Tuesday, the American Petroleum Institute, an industry group, reported a 4.6 million barrel drop, but gasoline inventories rose by 4.1 million barrels.

US crude prices plunged toward $46 a barrel on Wednesday after weekly government data left the oil market with virtually nothing to cheer.

U.S. West Texas Intermediate futures were at $47.14 a barrel, down 52 cents.

USA crude imports rose last week by 1.102 million barrels per day.

He said that they ought not to fear shale oil, as most of the increase in the future will come only from the Permian, people who attended the meeting said.

Markets see a 94.7 percent chance of the Federal Reserve raising interest rates at its June 13-14 meeting, according to Reuters calculations, though a Reuters poll on Friday showed top USA banks split about when the central bank hikes rates after that.

In a rare attack, gunmen stormed Iran's parliament and the shrine of Ayatollah Ruhollah Khomeini, leaving at least nine people injured.

"Other elements to consider are the renewed political instability in the Middle East, including within the Gulf Cooperation Council, and its potential impact on the OPEC deal, as well as the effect of the United States withdrawal from the Paris climate agreement and, more generally, Trump Administration's energy policy", he added.

The decision of a number of Arab countries to sever diplomatic relations with gas-rich Qatar would impose a strict regional isolation on Doha, and raised concerns about a global deal reached last month to reduce oil production in order to check the fall in prices resulting from a global supply glut.

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