Oil Market Outlook
Oil prices slumped last week amid reports of rising exports by Opec in June, mainly from Libya and Nigeria, which are exempt from output cuts that have done little to reduce a global glut.
While US figures showed that crude stockpiles had dropped by 6.3 million barrels, three times as much as expected, other data showed that drillers were once more adding rigs after a brief pause, leading to steadily rising US production.
The price of West Texas Intermediate (WTI) crude increased by $1.81 to close at $44.23 per barrel. Brent fell $1.21 to $46.71 and Dubai crude averaged $45. Thaioil forecasts that WTI this week will move within the range of $42 and $47, while Brent will trade between $44 and $49. Prices will continue to be pressured by rising output in Libya, Nigeria and the US. However, support will come from lower US crude stocks as refiners continue to run at high capacity levels. Among the factors expected to influence trade:
Reuters reported that crude exports by Opec in June increased by 450,000 barrels per day from a month earlier, to 25.92 million. Exports from Libya were at a four-year high of 730,000 bpd, while Nigerian shipments averaging 2.22 million bpd were the highest since December 2015.
US crude production in the week to June 30 increased by 88,000 bpd to 9.34 million, the Energy Information Administration said. Output had slid a week earlier because of field maintenance in Alaska and the impact of tropical storm Cindy. The EIA projects shale oil production this month will rise by 127,000 bpd to 5.475 million, with the biggest gains in the low-cost Permian basin.
Drillers added seven oil rigs in the week to July 7, after a decline the week before, bringing the total to 763, the most since April 2015, the energy services firm Baker Hughes said. That compares with 351 rigs in the same week a year ago.
Opec and non-Opec producers are staking out their positions ahead of a July 24 meeting on whether to change their agreement to keep 1.8 million bpd, or 2% of world production, off the market until March next year. The UAE energy minister has suggested that production cuts might be sought from countries not now in the agreement, possibly Libya and Nigeria. Russia was said to oppose deeper supply cuts but officials said on Friday they were open to any suggestions when all sides meet in St Petersburg.
US crude inventories in the week to June 30 fell by 6.3 million barrels to 502.9 million, well below the peak of 530 million seen in February, as refiners maintained high production levels. Gasoline stockpiles decreased for a third week, by 3.7 million barrels, to 237.3 million, suggesting driving-season demand is reviving. The EIA reported that refinery distillation rates have risen 1.1 percentage points to 93.6% and gasoline demand rose by the equivalent of 200,000 bpd to 9.7 million.
Economic indicators to watch include Chinese and US consumer and producer prices, euro zone industrial production and US jobless claims.