Oil stuck in Trump slump as risk aversion damps US supply drop
output curbs, declined for the first time in 13 weeks.LONDON, May 18 — Oil is getting ensnared in the turmoil surrounding Donald Trump even as US crude production, which has undercut Opec’s
Futures decreased as much as 0.6 per cent in New York, as investors across financial markets fled risky assets while Trump faces the biggest crisis of his presidency over a series of damaging revelations. That’s countering optimism after government data showed US stockpiles last week fell for a sixth straight week and crude production dropped, ending the longest stretch of gains since 2012.
Investors across asset classes have been rattled by the political uncertainty. The Organisation of Petroleum Exporting Countries and its partners are scheduled to meet on May 25 to decide if production curbs will be extended beyond June. While Saudi Arabia and Russia said this week they’re in favour of prolonging them to March next year, they could lose even more market share to producers like Nigeria and Libya that are exempt, according to Saxo Bank A/S.
“The impact of the Trump revelations is a short-term risk skewed to the downside,” said Ole Hansen, head of commodities strategy at Saxo Bank in Copenhagen. “The failure to break new highs in response to a bullish inventory report yesterday could indicate that we have rallied as far as we can ahead of next week’s Opec meeting.”
West Texas Intermediate for June delivery dropped as much as 29 cents to US$48.78 a barrel and was at US$48.89 (RM211) on the New York Mercantile Exchange at 9.06am in London. Prices gained 41 cents to settle at US$49.07 yesterday, the highest level since April 28. Total volume traded was about 13 per cent above the 100-day average.
Brent for July settlement 20 cents to US$52.01 a barrel on the London-based ICE Futures Europe exchange. The contract gained 56 cents, or 1.1 per cent, to close at US$52.21 yesterday. The global benchmark crude traded at a US$2.79 premium to July WTI.
US crude stockpiles declined 1.75 million to 520.8 million barrels last week, down from a record 535.5 million at the end of March, according to the Energy Information Administration. The nation’s oil production dropped to 9.3 million barrels a day, EIA data released yesterday show.
Venezuela, the oil-rich Latin American nation that signed up to Opec’s supply cuts, has reduced production more than any other member in the past year. Iraq is on track for what may be the country’s highest monthly crude exports even as the Middle East nation supports moves to extend Opec-led production cuts aimed at trimming bloated global inventories. — Bloomberg
Source: The Malay Mail Online