Crude Oil Rebounds As Dollar Falters

A ship sails at dusk

Global consumption of petroleum and other liquids will increase to 98.46 million barrels per day in 2017 and to 100.08 million barrels per day in 2018, said the US Energy Information Administration's (EIA) June 2017 Short-Term Energy Outlook (STEO).

USA oil producers exported a record 1.3 million barrels of oil a day in May, according to the Houston Chronicle.

Oil prices have dropped and continue to trade below $50 per barrel, as global crude markets continue to remain oversupplied although Middle East tension and declining U.S. inventories restricted the fall.

Oil prices plunged 4 percent in London and 5 percent in NY on Wednesday as a surprise expansion in USA crude stockpiles undermined those analysts arguing a market rebalancing is now under way.

"Despite strong compliance overall so far, OPEC's efforts have not borne much fruit, as far as oil prices are concerned", said Eklavya Gupte, senior editor, Europe and Africa oil news, S&P Global Platts. The organization members and other producers, including Russian Federation, had pledged to cut output by about 1.8 million barrels per day in order to shore up oil prices.

"Oil prices have been generally falling ever since that Opec meeting on May 25".

July WTI oil settles at USD45.64/bbl, down 8 cents, or 0.2%. August Brent crude on London's ICE Futures exchange was off 27 cents, or 0.6%, to $47.80 a barrel, also turning into the red.

However, the brokerage said that price gains could be capped by what it called a "deeply bearish" macro-economic environment.

New data from the Department of Energy suggests that during the first week of June, Iraqi oil entered the U.S.at the quickest rate in the past five years - marking the first time the nation's exports exceeded those from Saudi Arabia over the same time period.

However, the report from the EIA showed a "stunning" 1.418 million barrel-per-day drop in demand last week across all petroleum products, said Kloza.

Lines in the sand emerged at the start of the week when Saudi Arabia led a coalition of Persian Gulf allies in severing ties with Qatar over allegations of support for terrorist groups like the Sunni militants aligned with the group calling itself the Islamic State.

But analysts believe production could hit the key mark this year.

However, market participants are scared of the fact that "tension within the cartel could weaken the supply deal aimed at supporting prices (read: Oil at Pre-OPEC Level: ETFs to Benefit)".

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