Oil falls as OPEC production jumps

Additionally, the USA oil production is set to rise again in July - the fourth straight month of rise - by 127,000 bpd, according to U.S. Energy Information Administration.

"Brent spreads are getting clobbered", said Amrita Sen, chief oil market analyst at consultants Energy Aspects Ltd.in London. West Texas Intermediate crude is seen holding below $50 a barrel into 2020, based on futures prices.

But Saudi Arabia's energy minister said Sunday that he is confident that market rebalancing will soon gather steam.

State-run Saudi Aramco will supply full contracted volumes to at least five Asian buyers mainly in North Asia and lower volumes to some customers in India, China and South Korea, sources told Reuters.

OPEC's figures confirm an S&P Global Platts survey from earlier this month, which placed the cartel's crude production at 32.12 million bpd in May, up by 270,000 bpd over April, with exempt Libya and Nigeria-and under-complying Iraq-mostly contributing to the output increase.

The company also plans to reduce exports to the USA and Europe in coming months, but it has traditionally shielded Asian markets in the past. Roughly 40% of the group's cuts have come from OPEC's de facto leader, but summertime temperatures are also beginning to weigh on the kingdom's exports.

Reflecting the perception that global oil supplies are ample, the Brent forward curve 0#LCO: remains in a shape known as contango, with crude for delivery in half a year's time about $1.50 per barrel more expensive than that for immediate delivery, making it attractive for traders to store oil for a later sale.

Technical indicators suggest oil prices could fall further in the short term, in another blow for Saudi Arabia.

But some said the move won't change much.

Oil prices were trading lower this afternoon.

"While the jobs gap is closing, many people do not feel the benefits as they are facing stagnant wages and no career prospects", OECD Secretary-General Angel Gurria said in a statement. Last week, the number of oil rigs in the United States increased for the 21st straight week last week, setting a record.

Royal Dutch Shell, The largest operator, last week lifted the force majeure on oil exports from Forcados, one of Nigeria's largest fields, which had been in place for well over a year.

If achieved that will top the previous record high of 9.6 million barrels a day set in 1970 (when oil was a a couple of dollars a barrel). "The decline seen in the overhang" in developed-nation stockpiles "is expected to continue in the second half, supported by production adjustments by OPEC and participating non-OPEC producers".

  • Carolyn Briggs