Iraqi oil minister silent on output, awaiting outcome of OPEC committee meeting

Despite a decrease of 2 rigs, the increasing numbers of operating rigs, as well as increasing production, have been raising concerns that the USA shale oil producers which were able to cut their production cost dramatically over the past years are now a low-priced global competitor and would continue to undermine the OPEC agreement to cut supplies.

Brent crude, the global benchmark, was trading 0.04 per cent lower at $48.75 a barrel.

USA crude futures have slumped about 15 percent so far this year to about $46 per barrel, and as of Friday, ended its worst half-year performance in 19 years.

The price of crude has edged up on Monday due to the first fall in USA drilling activity since January.

Lingering worries about oversupply have knocked 16 percent off Brent crude so far this year, despite a deal involving OPEC members and some other major producers to curb production by about 1.8 million barrels per day (bpd).

WTI Crude Oil
Weekly August West Texas Intermediate Crude Oil

"Oil prices received momentum from Wednesday's United States data and the market rejected the lows that we saw". Meanwhile, exports of crude oil and petroleum products amounted to six million barrels per day as of April 2017.

Also on Thursday, oil began to be pumped from storage tanks at Al-Majid field, which has been closed for eight months because of power problems, said Omran al-Zwai, a spokesman for Arabian Gulf Oil Company (AGOCO), an NOC subsidiary that operates the field. The North American benchmark WTI is now trading at $46.1 per barrel and Brent at $2.7 per barrel premium to WTI. Exports and energy dominance were themes for the administration, though oil prices hit seven-month lows in mid-June and curbed the appetite for some spending in US shale, a factor highlighted by last week's rig count report.

In the last few days, the market has grown more bullish after USA data on Wednesday showed oil-product inventories declined. The growing concern is that rising Non-Opec output, led by the U.S. is increasingly offsetting the reduced Opec production. The rig count had risen for the previous 23 weeks.

"At current output levels OPEC will not succeed in eliminating the inventory overhang completely by year's end", Commerzbank analysts said in a note.

"To put that in context, that is almost a quarter of the 1.2 million barrels (per day) OPEC agreed to cut", said Greg McKenna, chief market strategist at AxiTrader. Libya, like Nigeria, is exempted from the cuts deal, though its oil production and exports remain vulnerable to disruptions by armed factions and restive workers.

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  • Darren Santiago