Russia's Novak: Gradual easing of oil prod. cuts possible from July 1

Muriel Colon
June 30, 2018

IRAQ said Opec should resist pressure to increase oil supplies, strengthening opposition to Saudi Arabia's plans as the group prepares to meet next week.

USA ally Saudi Arabia remains OPEC's most powerful member - with enough production capacity to manipulate global supplies.

Iraq, OPEC's second-largest producer, said the group should resist pressure to increase oil supplies because its curbs haven't yet achieved their goal, with crude prices still below the desired level.

Barely recovered from the roller coaster ride of recent weeks, traders are holding their breath for the June 22 meeting of oil ministers from OPEC member states in Vienna.

Saudi Arabia, with the bulk of the world's spare capacity, has said it would need 90 days to move rigs to drill new wells and raise production to 12 million or 12.5 million bpd.

Those against an increase this time are concerned it would threaten the unity of the 24-nation alliance involved in the deal and say forecasts from OPEC and others calling for higher demand in the second half of 2018 are too optimistic. Singh's visit was to take this forward with proposals for cooperation, the source said.

US production rose to 10.9 MMBPD for the week, but Kilduff said the market appeared able to absorb the increase.

A stronger dollar makes greenback-denominated commodities, like oil, more expensive for holders of other currencies.

Earlier in the session, Brent and US crude had fallen on concerns about rising production in the USA and expectations OPEC and other producers could relax voluntary output cuts. President Vladimir Putin will host Saudi Crown Prince Mohammed Bin Salman, while energy ministers Alexander Novak and Khalid Al-Falih will also meet.

Iranian output could drop by about 900,000 barrels a day, or about 23 percent, and Venezuela could witness an output fall by 550,000 barrels a day, or 40 percent.

Among the survey respondents who didn't expect there would be an agreement to increase at the meeting, most said that the Saudis and Russian Federation would go ahead and raise supplies regardless. "They will lose when prices go down because they will not be able to increase production and will get less revenue".

However, OPEC's president, Suhail Al Mazrouei, said on Tuesday that the USA has not asked the group to increase oil production in the wake of political unrest in oil-rich Venezuela and US sanctions on Iran.

The IEA meanwhile revised upwards its estimate for 2018 non-OPEC growth to 2 mb/d, and to 1.7 mb/d in 2019.

The rising stocks are in part a result of the surge in US crude oil production C-OUT-T-EIA, which has jumped by 28 percent in the last two years, to a record 10.8 million barrels per day (bpd).

While Venezuela is a member of OPEC, "the disaster in Venezuela, which has created a hole in the market, is not the fault of OPEC", said Daniel Yergin, the vice chairman of research firm IHS Markit and author of several books on the energy industry.

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