OIL PRICE: ABOVE $77 YET
REUTERS - Crude oil futures lost more ground on Friday, with the U.S. market set for a second week of decline on pressure from record U.S. production and expectations of OPEC boosting output.
U.S. West Texas Intermediate crude CLc1 lost 16 cents, or 0.2 percent, to $66.88 a barrel by 0423 GMT, after falling almost 2 percent on Thursday.
Global benchmark Brent crude LCOc1, which was little changed in the previous session, was down 9 cents, or 0.1 percent, to $77.47 per barrel.
For the week, WTI is on track for a 1.5 percent fall, adding to last week's near 5 percent decline, while Brent is set to rise 1.3 percent, widening the spread between the two benchmarks.
U.S. crude production has been rising to record-high levels since late last year. In March it jumped 215,000 barrels per day (bpd) to 10.47 million bpd, a new monthly record, the Energy Information Administration (EIA) said on Thursday.
"U.S. production is growing, the line is growing straight up when you look at U.S. production," said Tony Nunan, oil risk manager at Mitsubishi Corp in Tokyo.
"The big thing is the increasing spread between Brent and WTI. Financially it makes sense for buyers to take WTI as it is so cheap."
On Thursday, the premium for Brent over WTI surpassed $11 a barrel, the largest since early 2015. It has doubled in less than a month, as a lack of pipeline capacity in the United States has trapped a lot of output inland.
"A drop in inventories in the U.S. was overshadowed by U.S. output which jumped to a record-high level," ANZ said in a note.
U.S. crude stockpiles fell 3.6 million barrels last week, the EIA said, exceeding expectations for a decline of 525,000 barrels.
Brent hit a three-week low below $75 a barrel on Monday after OPEC and its allies, including Russia, indicated they could adjust their deal to curb supplies and increase production, but recovered later in the week.
OPEC and non-OPEC producers have committed to cut output by 1.8 million bpd until the end of 2018, but are ready to make gradual supply adjustments to deal with shortages, a Gulf source familiar with Saudi thinking told Reuters late on Wednesday.
Sources told Reuters last week that Saudi Arabia, the effective leader of OPEC, and Russia were discussing boosting output by about 1 million bpd to compensate for losses in supply from Venezuela and to address concerns about the impact of U.S. sanctions on Iranian output.
Russia would be able to raise its oil output back to pre-cut levels within months if there is a decision to unwind the price-protection deal with OPEC and other producers, a Russian energy ministry official said.
Concerns about U.S. bottlenecks are contributing to the decline in U.S. futures as well. Prices for physical barrels of U.S. light sweet crude delivered at Midland are at their largest discount to the benchmark U.S. futures price in almost four years.
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U.S. FRB - Industrial production edged up 0.1 percent in July after rising at an average pace of 0.5 percent over the previous five months. Manufacturing production increased 0.3 percent, the output of utilities moved down 0.5 percent, and, after posting five consecutive months of growth, the index for mining declined 0.3 percent. At 108.0 percent of its 2012 average, total industrial production was 4.2 percent higher in July than it was a year earlier. Capacity utilization for the industrial sector was unchanged in July at 78.1 percent, a rate that is 1.7 percentage points below its long-run (1972–2017) average.
NPD - Preliminary production figures for July 2018 show an average daily production of 1 911 000 barrels of oil, NGL and condensate, which is an increase of 64 000 barrels per day compared to June.
GAZPROM NEFT - For the first six months of 2018 Gazprom Neft achieved revenue** growth of 24.4% year-on-year, at one trillion, 137.7 billion rubles (RUB1,137,700,000,000). The Company achieved a 49.8% year-on-year increase in adjusted EBITDA, to RUB368.2 billion. This performance reflected positive market conditions for oil and oil products, production growth at the Company’s new projects, and effective management initiatives. Net profit attributable to Gazprom Neft PJSC shareholders grew 49.6% year on year, to RUB166.4 billion. Growth in the Company’s operating cash flow, as well as the completion of key infrastructure investments at new upstream projects, delivered positive free cash flow of RUB47.5 billion for 1H 2018.
REUTERS - Front-month Brent crude oil futures LCOc1 were at $72.34 per barrel at 0648 GMT, down by 12 cents, or 0.2 percent, from their last close. U.S. West Texas Intermediate (WTI) crude futures CLc1 were down 23 cents, or 0.3 percent, at $66.81 per barrel.