Both Brent and WTI is struggling amid trade tensions weakening the emerging markets and increasing supplies from OPEC, Russia, and the United States. However, declining inventory is providing the necessary support. WTI is currently trading at $69.8 per barrel and Brent at $9.3 per barrel premium to WTI.
Key factors at play in the crude oil market –
- According to Reuters, OPEC production rose by another 220,000 barrels per day in August to 32.79 million barrels per day.
- And, according to Platts’ survey, OPEC production was 32.89 million barrels per day.
- Saudi production rose in August to 10.48 million barrels per day.
- Trump is pressing Saudi Arabia to increase oil production by almost 2 million barrels per day. Saudi Arabia is likely to comply once the supplies from Iran starts drying up due to sanctions by the U.S.
- The U.S. reportedly asked allies to stop importing Iranian oil from November this year. Secretary Mike Pompeo has visited India last week to persuade, which is the biggest buyer of Iranian crude oil.
- Libyan production is set to recover to 1 million barrels per day in August. But Reuters report suggests recovery to 0.87 million barrels per day.
- Venezuela in crisis as oil production declined to 1.24 million barrels per day in July as per OPEC report. According to Platts, the production declined further in August to 1.22 million barrels per day. The country is struggling to cope up with the introduction of a new currency linked to the country’s crypto-currency Petro.
- EIA projects U.S. crude production to increase to 12 million barrels per day by end of 2019 and U.S. would become the single largest producer by the next five years.
- Current U.S production at 11 million barrels per day.
- API reported a draw of 8.64 million barrels of crude oil. Gasoline saw no changes in inventory.
Today’s inventory report from US Energy Information Administration (EIA) will be released at 14:30 GMT.