Surprise rise in USA oil inventories pushes crude prices down

Consequently, after hitting a five year high of $80 per barrel last month, oil prices slipped, yesterday to $75.68 per barrel occasioned by rising supplies in the United States and expectations that producers could relax voluntary output cuts. A weekly market report from USA motor club AAA said the national average retail price for a gallon of gasoline was at a point where consumers may be changing their habits. "While oil demand in the US, China and India shows some upside potential, downside risks might limit this potential going forward, including a slowdown in the pace of economic growth in some major economies, stronger impact of policy reform with regard to retail prices, and further substitution toward natural gas". "Not good!" the president said.

OPEC is expected to meet again later this month.

While the world turns its eyes on the Vienna Opec meeting, oil market watchers are also monitoring activity in Trump's home market, where higher prices are feeding more production of American shale oil.

Russian Federation and Saudi Arabia, leaders of the deal that curbed crude output and boosted prices to three-year highs, will discuss their next move in Moscow on Thursday as the two nations face off in the soccer World Cup.

While Saudi Arabia has the capacity to produce more oil, it "faces a delicate balancing act amid competing calls for how to deploy its spare capacity powers", Croft noted.

"However, looking at various sources, considerable uncertainty as to world oil demand and non-OPEC supply prevails, leading to a wide forecast range for demand for OPEC crude of around 1.8 million barrels per day", the report read.

Opec's second-biggest producer said supply curbs by the cartel haven't yet achieved their goal, with oil prices still below the desired level.

Although Saudi Arabia has benefited from oil's rally over the last two years, the government relies on a strong security relationship with the USA, giving Washington some influence in the debate over OPEC policy.

Oil prices ticked higher Thursday after data showed a decline in USA petroleum inventories. "Oil prices are artificially Very High!"

Prior to Trump's April tweet, the price of oil had soared from $50 a barrel last fall to over $70.

USA ally Saudi Arabia remains OPEC's most powerful member - with enough production capacity to manipulate global supplies.

The idea of forming an oil bloc to counter OPEC's hegemony was mooted by Indian Petroleum Minister Dharmendra Pradhan during the International Energy Forum meeting in April in New Delhi. U.S. crude traded Wednesday near $67 a barrel. Adding to their $500bil of losses since if all production growth is unprofitable what makes oil prices high??

The group's Vienna meeting next week would be a "crunch time" for OPEC, Warren Patterson, a commodities strategist at ING Groep, said in an emailed note Wednesday.

  • Eleanor Harrison