Russia Rolls Back Most of Oil Cuts as Supply Risks Worsen


Russia Rolls Back Most of Oil Cuts as Supply Risks Worsen

Andrew Cummings
August 5, 2018

Overall U.S. crude oil inventories actually rose by 3.8 million barrels last week to 408.74 million barrels C-STK-T-EIA , the EIA data showed.

USA crude inventories rose by 3.8 million barrels last week as exports declined, creating the largest increase in Gulf Coast stocks since March, the Energy Information Administration said. "This could severely dent the competitiveness of United States oil and derivatives in the Chinese market", said Abhishek Kumar, senior energy analyst at Interfax Energy.

Crude oil futures for September ended down $1.10, or 1.6%, at $67.66 a barrel on the New York Mercantile Exchange. West Texas Intermediate, the USA benchmark for the price of oil, was down 1.51 per cent to $67.72 per barrel.

Brent crude was on track to post a fourth week of declines in five on Friday, with the global oil benchmark poised to slip more than 1 percent amid continued volatility in the energy market. With the production increases made since then, they've succeeded: compliance was at 104 percent in July.


Oil traders were caught long and wrong by the surprising increase in OPEC production and more significant than expected US Crude inventory builds. USA crude CLc1 rose $1.30, or 1.9 percent, to $68.96 a barrel.

Crude stocks at the Cushing, Oklahoma, delivery hub fell by 1.3 million barrels, EIA said.

China's Unipec has also suspended purchases of USA crude amid the growing trade row, sources said.

Saudi Arabia, Russia, Kuwait and the United Arab Emirates have increased production to help to compensate for an anticipated shortfall in Iranian crude supplies once USA sanctions take effect. "Yesterday you had a strong rebound supported by Cushing but there's not a lot else that is driving prices higher so we are seeing a bit of a correction", Olivier Jakob at Petromatrix consultancy said.


On Friday, the U.S. Department of Labor reported total non-farm payrolls increased 157,000 in July, lower than the net average gain of 203,000 over the last 12 months.

Meanwhile, according to EIA, U.S. crude oil production was 10.9 million barrels per day which was 100,000 barrels per day lower than the previous week.

U.S. President Donald Trump has sought to ratchet up pressure on China for trade concessions by proposing a higher 25 percent tariff on $200 billion worth of Chinese imports. Although the sanctions don't officially take effect until November, Iran is already seeing customers flee as the USA imposes penalties on buyers after Trump quit a nuclear accord with the country.

Gasoline stocks fell by 2.5 million barrels, compared with analysts' expectations in a Reuters poll for a 1.3 million-barrel drop.


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