Oil Falls To A Fresh 1-Month Low

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Oil prices fell down once again after bouncing back overnight in U.S. trading, falling to a fresh 1-month low following data showed a surprise build in U.S. crude stockpiles and the return of more Nigerian crude to an already oversupplied market.

The oil price has slipped below $50 a barrel despite a pledge by the world’s largest exporters to extend an existing output cut of 1.8 million barrels per day (bpd) into next year in an effort to cut down bulging global inventories.

The U.S. West Texas Intermediate crude July contract was at $45.45 a barrel by 8:2 AM EDT, down 24 cents, or 0.55%, after hitting its lowest since May 5 at $45.34.

Meanwhile, Brent Oil for August delivery on the ICE Futures Exchange in London plummeted 25 cents, or 0.54% to 47.81 a barrel. The global benchmark dropped to as low as $47.65 earlier in session, a level not seen since May 5.

Unexpected surge in U.S. crude stockpiles

Oil prices plunged to their lowest level in about a month on Wednesday after data showed that U.S. crude stockpiles unexpectedly climbed for the first time in nine weeks.

The U.S. Energy Information Administration said in its weekly report that crude oil inventories increased by 3.3 million barrels in the week that ended on June 2, disappointing expectations for a crude-stock decline of 3.4 million barrels.

Gasoline inventories also increased by 3.3 million barrels. For distillate inventories including diesel, the EIA reported a rise of 4.4 million barrels.

Supply Gloom Caps Gains

Addition to concern about supply outstripping demand, Royal Dutch Shell on Wednesday lifted force majeure on exports of Nigeria’s Forcados crude, bringing all the country’s oil grades fully online for the first time in almost one and a half year.

The market has also come under pressure from news of rising output from Libya, which together with Nigeria is exempted from the production cut made by the Organization of the Petroleum Exporting Countries and its 11 partners.

“I’ve been quite bullish for the second half of this year, based on supply and demand balances and I would still not give up on that idea, that rebalancing is going to start in the second half,” said Tamas Varga, an oil strategist.

“But if Nigerian and Libyan production is picking up as well as they are now, then slowly, I am probably going to have to start changing my mind.”

Glut Concerns Weigh

Meanwhile, investors kept weighing the effect of diplomatic tensions between Qatar and other Middle Eastern nations, including Saudi Arabia, on an OPEC-led push to tighten up the market.

With oil production of about 620,000 barrels per day, Qatar’s crude production ranks as one of the smallest among OPEC producers, but tension within the cartel could deteriorate an agreement to hold back production in order to bolster prices.

Last month, OPEC and some non-OPEC producers extended a deal to cut 1.8 million barrels per day in supply until March 2018.

Concerns that the current rebound in U.S. shale production could upset efforts by other major producers to bring balance back to global oil supply and demand remained in focus.

Elsewhere On Nymex

Gasoline futures for July dropped down 0.7% to $1.491 a gallon, while July heating oil subtracted 0.2% to $1.413 a gallon. Natural gas futures for July delivery also dropped down 0.4% to $3.008 per million British thermal units, as traders anticipate the weekly storage data due later in the global day.

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Oil Prices Rise after Saudi & Russia’s OPEC Agreement

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Oil prices surges on Monday following Saudi Arabian and Russian energy ministers’ decision of extending the Organization of the Petroleum Exporting Countries’ (OPEC) output deal for an additional nine months.

Global benchmark Brent crude futures lifted 3.1 percent to $52 a barrel the highest level in two weeks while US marker crude West Texas Intermediate (WTI) edged up 3.2 percent to $49.

The gains will present some relief subsequent to what has been a dull few weeks for a lot of commodities in the course of US President Donald Trump’s effort to get his infrastructure plan started and tightening credit in China.

Energy ministers Khalid Al-Falih (Saudi) and Alexander Novak (Russia) met on Monday in Beijing and talked about the oil output policy.

Russia is the world’s largest oil manufacturer while Saudi Arabia is the major exporter.

Both ministers said in a shared statement that they have agreed that supply cuts needs to carry on to 2018, an act towards keeping the OPEC-led deal so as to hold up prices in place longer than the initially decided optional six-month extension.

The Saudi Arabian minister also said that there has been a noticeable drop to the inventories but they are not where they want to be in meeting the five-year average.

For this reason, they have come to the decision that the deal has to be extended.

The ministers suggested that next round of cuts should be on the same conditions like the previous agreement where OPEC, Russia and other producers settled to cut production by 1.8 million barrels per day in the first half of 2017 with a possible six-month extension.

Khalid-Al-Falih told the reports that OPEC countries and non-OPEC countries taking part in the agreement on cutting oil outputs has accomplished a complete consent on extending the contract.

He added that he thinks that the verdicts will be positive in Vienna and that they bring together a full agreement of the group.

Based on the joint statement of Saudi Arabia and Russia, they have agreed to discuss with the countries-parties in the deal and other producers ahead of May 24 so as to achieve a complete consent on the nine- month extension of the declaration on cooperation.

Both countries are planning to suggest the nine-month extension at the meeting which will take place on May 25.

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Oil Prices Recover after Earlier Decline

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Oil prices has rebounded on Friday after falling earlier which  caused distress in markets resulting in traders and investors to seek refuge in safe-haven bonds, triggering the yen and gold to haul up a record-breaking high for the world stock market.

As of 14:07 GMT, gold futures for the June contract is currently 0.02 percent down to $1,228 while spot exchange rate for Japanese yen fell 0.01 percent against the US dollar to $0.008883.

Traders had to seek out for shelter overnight as US crude oil WTI futures for June delivery fell 0.3 percent to $45.38 a barrel as of 13:28 GMT, off the six-month low of $43.77 target but it is still under constant worry  in the course of continuous global supply glut concerns.

Crude has recovered from its previous decline gaining 0.5 percent to $45 a barrel.

Brent oil futures for the July contract was up 0.8 percent to $48 a barrel after hitting a six-month low of $46.65 the previous session.

Hong Kong’s PetroChina and CNNOOC also closed their session with a 2 percent loss to HK$5.26 and 0.7 percent low to HK$8.85 respectively.

Oil was not the only commodity to encounter declines this week. Chinese iron ore edged down almost 7 percent in Shanghai overnight after falling 8 percent on Thursday.

Mining giant Rio Tinto (RIO) closed 2 percent down to AU$57.150 hitting a six-month low, while Glencore PLC (GLEN) is up almost 2 percent to £282.70 and copper miner Antofagasta rose 1 percent to £760 on Friday.

Some of the world’s most sensitive commodity currencies went downside with the Australian dollar losing 0.1 percent to $0.7399 the same goes for the Russian ruble also 0.1 percent low to $0.01711. The Canadian dollar broke the trend gaining 0.1 percent to $0.7284.

Crude prices has been under pressure after the US Energy Information Administration said in its weekly report that crude oil inventories fell by 930,000 barrels in the week ended April 28 which was a much smaller take than expected.

Back in November last year, the Organization of the Petroleum Exporting Countries or OPEC together with other manufacturers including Russia came to an agreement to cut production by about 1.8 million barrels per day between January and June yet the output cut has had little effect on inventory levels.

A final decision on whether or not to extend the agreement beyond June will be discussed by the oil union on May 25.

Other commodities were also up on Friday with silver futures increasing 0.1 percent to $16.334 and copper steady at 0.02 percent to $2.511.

Meanwhile, the Indonesian government is asking $2 billion in reimbursement from Thailand’s state oil company and its Australian division due to an oil spill in the Timor Sea nearly eight years ago.

The lawsuit was said to be registered last Wednesday at the Central Jakarta District Court in an attempt to seek justice for the oil spill at the Mondara oil field that started on August 21, 2009.

The demand for compensation includes $1.7 billion for environmental damage and $330 million for restoration work.

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Oil Surges after hitting One-month Low

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Oil prices have recovered on Friday after falling to a one-month low a day earlier encouraging investors to purchase at economical levels, prior to the Organization of the Petroleum Exporting Countries (OPEC) meeting in May where manufacturers could extend the production cuts.

Growth was also supported by a drop in the dollar and indications that Russia, a non-OPEC member, was completely agreeing with the output limits decided among major producers last year by cutting 300,000 barrels per day.

Saudi Arabia’s energy minister was pleased about the news saying Russia’s involvement was good and that total non-OPEC compliance was 85 percent.

The US Dollar Index (DXM7) was down 0.09 percent to $98.93 on Friday.

U.S. West Texas Intermediate (WTI) crude was up 0.9 percent to $49.43 a barrel while Brent oil futures were also 0.9 percent high to $52.31 per barrel.

Gasoline RBOB futures also edged up 0.6 percent to 1.5727 on Friday.

However, oil prices were still heading off for its second straight weekly and monthly losses for two reasons. First, is the Thursday’s crude prices fall following the restart of two main Libyan oilfields the Sharara and El Feel due to disputes of an armed group that had blocked the pipelines there.  Second, are concerns over the OPEC output cut said to have been unsuccessful to completely constrict the saturated market.

WTI crude is set for small weekly loss about 8 percent below its peak in April. Brent is already almost down around 8.5 percent from this month’s peak and is still on track for second although small week of declines.

OPEC and other manufacturers including Russia agreed at the start to cut production by almost 1.8 million barrels per day, this was only during the first half of the year. However, OPEC gave in to demands to extend the cuts in order to cover the whole 2017 so as to take care of brimming supplies in other places.

The organization stated that the output cut will be extended bumping into the reality of the restart of two Libyan oilfields and persisting expansion of US shale oil.

Meanwhile, Russia has called for its state-owned companies to pay out half of their earnings in dividends this year in an effort made by the government to drive corporations such as Gazprom, Roseneft, Aeroflot and Alrosa to block openings in the federal budget.

Shares in the state-run companies went up on Friday after the announcement.

Gas group Gazprom’s shares rose 2 percent to 136.21 in Moscow as of 12:50 GMT. The company said on Thursday that it plans to pay out 7.89 rubles ($0.14) per share in dividends less than would be approved by the 50 percent demand.

Russia’s biggest oil company and largest oil producer by output Rosneft has decided to give 35 percent of its 2016 profits in dividends.

Moscow’s index MICEX (MCX) boosted 0.3 percent to 2,019 on Friday.

Last February, Russia’s deputy economy minister Olga Dergunova said that raising dividend costs could bring as much as 110 billion rubles ($1.9 billion) of additional budget profits.

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