Saudi Arabia may cut June light crude prices to nine-month low

US crude has lost almost 9 percent since April 11, weighed down by the market's impatience with the slow pace of inventory drawdown around the world even after major oil producers agreed late a year ago to cut production by 1.8 million barrels per day for the first half of 2017.

Overnight, crude futures settled lower on Monday, after Libya ramped up production while fears resurfaced that rising US production would offset an OPEC-led deal to curb the global glut in supply.

Such a deal would likely mean an extension of a pledge by the Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russian Federation to cut output by nearly 1.8 million barrels per day (bpd) during the first half of the year.

The oil bears are gaining leverage over the bulls as confidence in the stability of crude prices continues to wane.

Predictably, that has led to a sharp resurgence in USA oil production. "If this continues, gasoline production will occur at a much higher rate than there is an appetite for, as demand now remains muted compared to previous year".

Oil prices in 2017 have been determined by two main counterbalancing forces - supply cuts led by Opec and rising shale oil production in the US, QNB has said in an economic commentary.

It seems Jersey gas prices have been slipping slightly lower of late, just as Memorial Day, the unofficial start of the summer driving season, appears down the road. Russian Federation is the world's leader in oil production and has been increasingly reliant upon oil sales to drive its economy since the imposition of economic sanctions by the United States and the European Union in 2014.

According to him, non-OPEC increased its production by around 1.8 mb/d from September to November 2016, and over the same period, OPEC increased its production by about 500,000 b/d.

On Friday, data from Baker Hughes BHI, -0.47% showed a rise in active USA oil rigs for a 15th week in a row, implying that further gains in domestic production are ahead. "They are still waiting to see the global oil inventory draw down from the last agreement". Iran is exempt from the production cut deal.

Analysts are optimistic another OPEC production cut agreement will eventuate.

Iran's oil minister said on Saturday that OPEC and non-OPEC countries had given positive signals for an extension of output cuts, which Tehran would also back.

"Present volume of Iran's crude output stands at 3.8 million barrels according to secondary sources", highlighted the official stressing that Iran remained committed to OPEC deal within the envisaged time though boosting the country's oil production has been placed on the agenda. The selloff indicates a belief among oil traders that oil prices had "gone up too much compared to the fundamentals".

  • Zachary Reyes