Growing glut of high-quality crude signals danger for oil market

The USA through May 2018. The upward surge has stalled for the last two months. U.S. production was down 30,000 bpd in May

At 1010 GMT, the October ICE Brent crude futures contract was down 10 cents from Thursday's settle at $73.45/b, while the NYMEX WTI September contract edged down 3 cents to $68.93/b.

Initially, the OPEC+ members agreed on a combined cut of 1.8 million bpd but lower production by a number of countries in fact made the cuts deeper, raising fears of global oil shortages and a potential spike in the oil prices as a result.

The EIA now estimates that the June production would be 10.900 million bpd, but the revision to the May figure suggests that the output for June could be lower than the expected 10.9 million bpd, according to Bloomberg.

U.S. Energy Information Administration said in a weekly report on Wednesday that the country's commercial crude inventories rose by 3.8 million barrels in the week through July 27, higher than market estimates of a decrease of 2.8 million barrels.

Petrol stocks declined 2.5 million barrels, while crude stocks at the Cushing, Oklahoma, delivery hub for USA crude futures fell by 1.3 million barrels, EIA data showed.

Bearish EIA crude inventories data and rising Russian output drag oil lower.

It was gathered that the Arabic nation's production increased by 230,000 barrels daily in July to 10.65 million barrels per day.

The market's expectation was 2.8 million barrels of crude oil draw.

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Also, crude stocks at the Cushing, Oklahoma, delivery hub for WTI futures were down, dropping by 1.3 million barrels, EIA data showed.

On Monday, August 6, the first set of USA sanctions on Iran will snap back, so we will be probably looking at tougher actions over August and September, Croft said.

But a complete halt to Iranian supplies looks unlikely with Bloomberg reporting on Friday that China, Iran's biggest customer, has rejected a US request to cut imports from the OPEC member.

US crude oil imports averaged 7.75 million barrels per day last week, maintaining the levels of the previous week.

Additionally, Russia appears to have increased its production in line with OPEC's decision in late June to increase its output, with its crude and condensate production increasing 1.4% last month to 11.215 million b/d, the energy ministry said yesterday.

Trump has turned up pressure on China for trade concessions by proposing a higher 25% tariff on $200 billion of Chinese imports and China has said it will retaliate.

Analysts said widening of positions by participants amid pick up in spot demand against tight stocks position on restricted supplies from overseas markets mainly kept crude palm oil prices higher at futures trade.

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