Trump ups pressure on OPEC to boost supply as oil holds gains
The tweet came after the holiday’s oil trading had already ended in New York. Futures gained 0.3 percent, extending crude’s 15 percent rally since early June. Earlier, the Saudi and Russian energy ministers reiterated their 1 million-barrel-a-day output increase agreement reached last month in Vienna, following Trump’s tweet over the weekend that he’d received assurances from the Middle Eastern nation that it could increase production by double that volume.
Saudi Arabia said it would “use its spare capacity when needed to deal with any future changes in oil supply and demand rates, in coordination with other producing countries,” according to a report by the Saudi Press Agency.
Despite Trump’s ongoing campaign to encourage a more aggressive production increase, Morgan Stanley on Tuesday raised its Brent crude forecast to $85 a barrel next year.
“Bulls are regaining control,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. in London. “It looks as though any additional supply increase from Gulf producers and Russia will not be able to replace lost barrels from Libya, Iran and Venezuela.”
West Texas Intermediate crude for August delivery rose 19 cents to $74.33 a barrel when trading ceased around 1 p.m. on the New York Mercantile Exchange, holding near a three-year, intraday high of $75.27 on Tuesday. There was no settlement on Wednesday because of the holiday.
Brent for September gained 48 cents at $78.24 a barrel on the London-based ICE Futures Europe exchange, and traded at a $6.28 premium to WTI for the same month, informs Bloomberg.
The American Petroleum Institute was said to report that U.S. inventories dropped by 4.51 million barrels last week, and a Bloomberg survey also estimates a decline. Inventories in the key U.S. storage hub of Cushing, Oklahoma, shrank by 2.6 million barrels, the API was said to report. If confirmed by government data Thursday, that would be the seventh consecutive drop. A Bloomberg survey forecast a 5 million-barrel slide in nationwide stocks.
On top of global supply disruptions, rising demand is also helping push up prices.
“Refineries are going strong, and we’ve continued to see pretty robust inventory declines, and that suggests that as we move forward, this market is going to be a little less supplied than we would think,’’ Melek said.