Published: Mon, July 16, 2018
Money | By Ralph Mccoy

Oil prices settle mixed amid IEA report

Oil prices settle mixed amid IEA report

The expected drop in Iranian crude exports this year due to renewed usa sanctions, coupled with a decline in Venezuela's production and outages in Libya, Canada and the North Sea have driven oil prices to their highest since 2014 in recent weeks.

On Wednesday, it was the opposite story, as economic worries trumped supply disruptions. Then again, around the Fourth of July.

A number of uncertainties for global oil supply and demand could keep prices volatile in the near term, EIA said, including the impact of United States sanctions on Iranian oil buyers, sharp production declines in Venezuela, conflicts in Libya shutting export infrastructure, and the status of the supply cut agreement between OPEC and non-OPEC producers. Iran exports roughly 2.5 million bpd, most of which goes to Asia. "In turn, this could have a marked impact on oil demand growth". United States stocks fell by 12.6 million-barrel for the week ended July 6.

Brent crude fell $5.46, or 6.9 per cent, to settle at $73.40 a barrel. Venezuelan output sank to 1.36 million b/d in June, from 1.43 million b/d in May. USA crude exports dipped, but stayed near record highs. That report took oil from a risk on to a risk-off situation. With the primary dynamics driving markets still based around geopolitical tensions and rising production from US Shale, this could be another volatile trading quarter for oil.

That was President Donald Trump's message to OPEC last week, adding that "gas prices are up & they are doing little to help". "Germany, as far I'm concerned, is captive to Russia", Trump said.

"Trump is concerned about European Union and German dependence on Russian gas".

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Another unexpected drop in USA inventories may have also added to the support late in the week. We will keep an eye on this. Phil's daily commentary is also featured in Futures Magazine, International Business Times, Inside Futures, 312 Energy, Enercast, among many others. The truth is that even with the ups and downs day to day we are in a supercycle on oil. Short-term rally should be selling opportunities because of this, especially near the $2.85 level as we not only have structural support and resistance, but we also have the 50 and the 200 day EMAs converging. We have compared the double bottom at $26 a barrel to a generational bottom. Gasoline production increased last week, averaging 10.7 million barrels per day. Pay attention to the U.S. dollar, because it is highly influential on this market as well. We will see triple digits in oil in 2020, which has been our forecast and remains so. Production growth in the United States, Brazil, Canada, and Russian Federation will make up most of total global supply growth in 2019.

Supply growth of this magnitude outpaces EIA's forecast for global liquid fuels consumption growth of 1.7 MMBPD for 2019.

An oil pump is seen operating in the Permian Basin near Midland, Texas, U.S., May 3, 2017. Distillate saw a big jump in supply rising by 4.125 million barrels. In 2019, EIA forecasts that the United States will average almost 12 million barrels of crude oil production per day.

US crude CLc1 edged up 5 cents to $70.38, after spending most of Asian trading slightly lower. The agency expects inventories to be relatively unchanged in 2018 and to increase by 0.6 MMBPD in 2019, Kallanish Energy reports.

OPEC and non-OPEC producers reached an agreement in December 2016 to curtail oil output jointly and ease a global glut after more than two years of low prices.

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