Oil Price - June 5

[dan_s]

At 4:52 PM ET West Texas Intermediate is trading at $65.50/bbl, up $0.75/bbl.

Below is today's "Fairy Tale" that put pressure on crude oil prices.
This is true: Whenever the government tries to "talk down" oil prices, you know the global oil market is getting tight and oil prices are going up.
Also, Raymond James estimates that Saudi Arabia and Russia are the only countries with significant remaining production capacity. Per RJ, the most that SA and Russia can bring to market in the near-term is ~600,000 BOPD. My SWAG is that a few of the Persian Gulf companies can add another ~100,000 by year-end. At the same time Venezuela's production keeps falling.
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The U.S. government has unofficially asked Saudi Arabia and some other OPEC producers to raise oil output, three OPEC and industry sources said, although it has not requested a specific figure. Earlier on Tuesday, Bloomberg reported that the U.S. government had asked them to increase oil production by about 1 million barrels per day (bpd).

The request comes after U.S. retail gasoline prices surged to their highest in more than three years and President Donald Trump publicly complained about OPEC policy and rising oil prices.

It also follows Washington's decision to reimpose sanctions on Iran's crude exports, which could disrupt global oil supply. Iran's crude oil output could fall 1 million bpd as a result of renewed U.S. sanctions, according to a note from Standard Chartered (LON:STAN).

"Markets are forward-looking. The fact that Russia, Saudi Arabia and OPEC more broadly have started discussing raising output levels, you've got this pretty swift correction," said Tyler Richey, co-editor of the Sevens Report in Jupiter, Florida.

Saudi Arabia and Russia were already discussing raising OPEC and non-OPEC oil output by around 1 million bpd, sources familiar with the matter said on May 25.

Does this sound like SA will willing to lower oil prices to please Trump?: Saudi Aramco has raised its July price for its Arab Light grade for Asian customers by 20 cents a barrel versus June to a premium of $2.10 a barrel to the Oman/Dubai average, it said on Tuesday. BTW another minor point: SA wants to take part of Aramco public because they need to raise $Trillions.

The Organization of the Petroleum Exporting Countries meets in Vienna on June 22 to decide whether the group and non-OPEC producers, including Russia, should raise output to make up for any supply shortfall from Iran and Venezuela.

Global oil supply has tightened with the OPEC-led production cuts that began in early 2017.

"(The output decision) is going to be the main event of the month and the main input for the second half of the year, so any change in OPEC policy is a big event," Petromatrix strategist Olivier Jakob said.

[dan_s]

Investing.com – WTI crude oil prices settled higher Tuesday shrugging off fears of an uptick in global output following a report that the U.S. government had asked major oil producers to increase oil output.

On the New York Mercantile Exchange crude futures for July delivery rose 2.1% to settle at $65.52 a barrel, while on London's Intercontinental Exchange, Brent fell 0.16% to trade at $75.16 a barrel.

Crude prices rebounded from session lows as focus shifted toward U.S. energy inventory data due Wednesday expected to show a draw in domestic crude supplies for the second straight week.

Oil prices started the day on the back foot after Bloomberg reported, citing sources, the U.S. government had asked Saudi Arabia and other OPEC members to increase oil output by around 1 million barrels a day.

The request comes in the wake of President Trump's tweet in April, in which he criticised OPEC and claimed oil prices were "artificially high."

Jeff Currie, Goldman’s global head of commodities research, played down the impact of an increase of 1 million barrels per day, insisting stockpiles would continue to edge lower in the second half of this year.

Sentiment on oil prices remained mostly negative, however, as investors continued to fear OPEC, at its meeting on June 22, could ease production curbs to offset falling supplies in Venezuela and an expected drop in Iran oil exports as U.S. sanctions loom.

In November 2016, OPEC and other producers, including Russia agreed to cut output by 1.8 million barrels per day (bpd) to slash global inventories to the five year-average. The OPEC-led deal was renewed last year through 2018.

A fresh batch of inventories data from the U.S. Energy Information Administration data due 10:30 ET Wednesday expected to show U.S. crude stockpiles fell by 1.824 million barrels last week.