Analysis by Dr. Nancy Yamaguchi
Crude oil prices are slipping based on news of increased crude exports from OPEC in July, plus a possible build in U.S. crude oil inventories.
West Texas Intermediate (WTI) crude had opened Monday at $50.21 per barrel (/b), the first time WTI had opened above $50/b since May 25. Until today, WTI prices had risen for six trading sessions in a row. The rally was broken during the current day’s trading session. WTI opened at $48.80/b, down by $1.41 from yesterday’s opening. As of 8:06 a.m. EDT, WTI prices were $49.05/b.
Prices began to taper down yesterday when Bloomberg released a survey of analysts, oil companies and ship tracking data estimating that OPEC crude output rose by 210 thousand barrels per day (kbpd) in July, rising to 32.87 million barrels per day (MMbpd). The survey estimates that Libyan crude output rose 180 kbpd, and Saudi Arabian output rose by a smaller 30 kbpd to 10.05 MMbpd.
Saudi Arabia has decided to reduce crude exports this month, which had contributed to the increase in prices. However, Libya is not constrained by the production cut agreement. Bloomberg reported that Libya’s crude exports rose to a three-month high in July, averaging 865 kbpd. However, Libyan output and exports are notoriously volatile because of internal strife.
Prices weakened further upon the release of inventory data from the American Petroleum Institute (API). API reportedly estimated that U.S. crude inventories rose by 1.8 million barrels (MMbbls) last week. Counterbalancing this, gasoline stocks fell by an unexpectedly large 4.827 MMbbls and diesel stocks fell by 1.225 MMbbls. The earlier industry survey had forecast a crude stock draw of 2.8 MMbbls and a gasoline stock draw of 1.3 MMbbls.
The U.S. Energy Information Administration (EIA) will release official data on inventories later today.