Oil prices steady as markets await US data, extended output cut

To stop this, analysts at Goldman Sachs have suggested the oil futures price curve should be pushed into backwardation, where forward prices are below current ones.

But it isn't just USA shale that is going to grow between now and the end of the OPEC deal in March 2018.

Although slightly weaker today, oil prices have been drifting higher over the past two and a half weeks as we had predicted in our previous report. Between June 20, 2014, and May 23, 2017, crude oil (DBO) (USL) (OIIL) (SCO) prices fell ~52%. The oil market will get updates on USA supplies from the American Petroleum Institute late Tuesday and the Energy Information Administration early Wednesday.

Kuwaiti oil minister Essam al-Marzouq told reporters that "all options are open", while UAE energy minister Suhail al-Mazrouei said: "OPEC is based on consensus so we need to hear all of the options and make the right choice".

President Donald Trump's proposal to sell half of the US strategic oil reserve highlights a decline in the biggest oil user's reliance on imports - and a weaning off OPEC crude - as its domestic production soars. That's why we should be surprised that some OPEC members have failed to stick to the agreement at all times.

The data comes one day before OPEC, along with non-member nations, are scheduled to decide whether to extend its agreement to cut world supply, an effort that has only recently started to bear fruit in global inventory figures.

Uncertainty about what happens next with an OPEC-led production cut and lower-than-expected supply drains pushed oil prices lower on Wednesday.

The budget proposal said USA oil production has risen and the share of USA oil imported from OPEC countries has fallen sharply compared with the 1970s, so cutting the SPR in half "would very likely provide sufficient protection in the event of an energy crisis".

OPEC meetings give physical form to an oil market that is otherwise just a complicated and rather abstract concept. This month, however, OPEC's exports declined significantly, the firm discovered. Morgan Stanley experts assume that OPEC members are selling out their oil inventories.

OPEC and non-OPEC ministers would meet on Wednesday for informal consultations in Vienna in a last-ditch bid to agree the duration of oil output cuts.

The unexpected crash in the global market of crude oil seen over the last few days has made the worldwide community anxious about the future of crude oil.

One last note on the Trump budget: it eliminates federal royalty payments to the states for offshore oil production.

Total gasoline inventories decreased by 800,000 barrels last week, according to the EIA, and remain near the upper limit of the five-year average range.

"I think we nearly all agree on nine months", Algeria's Energy Minister Noureddine Boutarfa said in an interview in Vienna on Wednesday.

"The recent successful visit of President Trump to Saudi Arabia could be seen as the first move to this direction", Yusufov said. In turn, eleven non-OPEC producers, including Russian Federation, agreed to jointly slash their output by 558,000 barrels a day. The third-largest non-OPEC participant in the agreement pumped 1.76 million barrels a day in April, overshooting its target of 1.68 million, OPEC estimates show.

  • Zachary Reyes