Published: Wed, June 27, 2018
Money | By Ralph Mccoy

Oil prices rise on uncertainty over Libyan crude exports

Oil prices rise on uncertainty over Libyan crude exports

He sees Saudi Arabia, Russia, the United Arab Emirates, and Kuwait bringing modest supply to the market by the end of the third quarter.

LONDON, June 25 (Reuters) - Brent crude oil fell on Monday as investors prepared for an extra 1 million barrels per day (bpd) in output to hit the markets after OPEC and its partners agreed to raise production.

Saturday's accord, in which non-OPEC countries ratified the previous day's deal, dropped the pledge that the 1-M BPD increase should be shared proportionally among members, opening the way for the full volume to flow, Al-Falih said.

Despite the production increase, USA bank Goldman Sachs said an oil market deficit was likely to prevail.

Saudi Arabia promised to act decisively to keep Crude Oil prices under control, signaling a real supply boost approaching 1-M BPD is on the way to global markets. Stockpiles at Cushing have slumped for five weeks with the start of the summer driving season when demand peaks. The spread between the European and American markers narrowed 18 per cent Monday and has nearly halved in under a week.

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The market rallied further in post-settlement trading, after the American Petroleum Institute said US crude inventories fell a surprising 9.2 million barrels, far exceeding the decline of 2.6 million barrels that had been expected. USA crude's discount to Middle East benchmark Dubai oil shrank to the smallest since May 16. However, Goldman warned against positioning for the move lower right away, given the current market deficit and low inventories.

It would be troubling if that jump in prices became a trend, the Minister said, adding that producers with spare capacity, such as Saudi Arabia, can fill any gap left by falling production elsewhere.

Even if output were increased aggressively, the group's announcement doesn't threaten "to create a large reversal in fundamentals", Goldman said.

OPEC ministers claimed the group would increase its overall production by a million barrels per day, but the increase is likely to be much lower because some members - Venezuela and Iran in particular - will find it hard to increase their current level of production.

Al-Falih signaled that supply would increase by near 1 million barrels a day after the Organization of Petroleum Exporting Countries adopted a pact aimed at lifting output.

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