Oil prices turn positive as US crude inventories fall

Andrew Cummings
June 13, 2018

"With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High!"

Global oil demand is expected to increase next year, according to a first estimate from the International Energy Agency (IEA), despite lower production coming from some leading producers. A mix of new USA sanctions on Iran, chaos in Venezuela and robust global growth has tightened the oil market.

The president's tweet comes ahead of a two-day meeting that OPEC and other producers will attend beginning June 22 in Vienna to discuss future policy on output.

"The Trump administration is trying to intervene in the affairs of a sovereign organization", Iran's OPEC governor, Hossein Kazempour Ardebili, said in an interview.

Yet, even with the 1.8 million-bpd production rollback, the total OPEC/non-OPEC level would still be around 1 million bpd below the October 2016 levels, because some producers, notably Saudi Arabia, have cut more than intended, while others, most notably Venezuela, have seen involuntary production declines and are unable to lift production, the person told Bloomberg.

The president has been vocal about his dissatisfaction with oil prices in the past.

The oil supply deal is set to continue through the end of 2018, but plans for its continuation were unclear for next year.

He last raised the issue in April.

Oil prices dropped on Wednesday as a result of increased supplies in the U.S.

His tweet comes in advance of a meeting of the Organization of the Petroleum Exporting Countries and Russian Federation planned for June 22 in Vienna to discuss easing supply caps that have been in place since the beginning of 2017.

The U.S.is putting pressure on OPEC members to increase production as global benchmark prices flirt with US$80 a barrel, raising pump prices in the months before the U.S. votes in midterm elections that could decide which party controls Congress. Prices nationwide have edged up toward $3 USA a gallon as the U.S. hits its peak summer travel season, still less than the $4 United States a gallon in 2008 during the 2007-2009 Great Recession.

Trump sent out his tweet hours after returning to Washington from a summit with North Korean leader Kim Jong Un in Singapore and it was not immediately clear what prompted his comment.

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