Oil prices extended losses on after JP Morgan cuts forecast

Eileen GuzmanJun 10, 2018

The request, described by Bloomberg as "rare", coincides with a rise in crude oil prices, which reached more than $80 a barrel in May for the first time since November 2014.

US West Texas Intermediate (WTI) crude futures were up 19 cents, or 0.3 per cent, at $66.14 a barrel.

In similar fashion, the metal for delivery in July contracts was trading higher by Rs 32, or 0.73 per cent to Rs 4,387 per barrel in 272 lots. At this price point, Saudi Arabia will not seek to restrain Opec output and United States shale oil output would not be uneconomic.

Oil prices fell on Wednesday on signs Saudi Arabia and other big producers may increase production, and USA crude slid more than 1 percent on a surprise build in domestic crude stockpiles. For the week, Brent was set to fall 0.2 per cent, while USA crude was little changed.

The group is due to meet at its headquarters in Vienna, together with top producer but non-OPEC member Russian Federation, on June 22 to discuss production policy.

The U.S. government has unofficially asked Saudi Arabia and other OPEC producers to boost output, sources told Reuters on Tuesday.

Oil prices fell on Friday, extending losses as JP Morgan cut its crude price forecast, after already weakening on concerns about surging USA output weighed and falling demand in China.

EIA reports a 2.1 million increase in crude oil inventories.

Also, shorter lead time for U.S. shale to go from exploration to production, together with lower oil threshold prices of $60-$70 range today needed for shale rigs to start work from $100 in previous years, are added incentives for Saudi to agree.

U.S. President Donald Trump pulled out of that nuclear deal last month and announced the "highest level" of sanctions against Iran, the biggest producer in the Organization of the Petroleum Exporting Countries after Saudi Arabia and Iraq.

Energy Information Administration data due today is expected to show nationwide stockpiles dropped by 2.1 million barrels, according to a Bloomberg survey. The fact that they did not wait for the next Opec-Russian summit in Vienna on June 22 demonstrates the priority Moscow and Riyadh place to their new shift in oil policy.

The 14 OPEC members account for 1.21 trillion of the world's total proved reserves of 1.48 trillion barrels of crude oil.

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