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Oil dips on doubts over OPEC’s ability to reduce inventories

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Oil eased on Tuesday, paring earlier gains, as doubts about OPEC’s ability to reduce global crude inventories put the price on track for its six fall in seven days.

Brent crude LCOc1 was down 3 cents at $51.57 a barrel by 1411 GMT, down from a session high at $51.92, while U.S. crude futures CLc1 were down 13 cents at $49.10 a barrel.

Brent has fallen by almost 10 percent since late 2016, despite efforts led by the Organization of the Petroleum Exporting Countries and Russia to cut output by 1.8 million barrels per day (bpd) in the first half of 2017.

With oil supplies still around record highs, Stephen Schork of the Schork report said on Tuesday that “OPEC has failed miserably in its endeavor to balance the oil market”.

JPMorgan said in a market note “it is evident that … crude markets are still struggling to clear (oversupply)”. The bank said it was closing its “August Brent long position at a loss.”

To reduce the supply overhang, JPMorgan said OPEC “will be forced to renew, and possibly deepen the agreement if they wish to keep prices much above $50 per barrel”.

Russia said at the weekend its oil output could climb to the highest rate in 30 years if OPEC and non-OPEC producers do not extend their supply reduction deal beyond June 30.

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Written by Amanda Cooper

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