Saudi Arabia’s output rose by 85,500 barrels per day in May, according to the cartel’s monthly report out Tuesday. But the kingdom said it boosted output by 161,400 bpd to just above 10 million bpd, according to its own data. Overall OPEC production rose by 35,000 bpd to 31.87 million bpd as production fell in Nigeria, Venezuela and Libya, offsetting Saudi Arabia’s gains. OPEC kept its global demand expectations steady. It sees 2018 growth at 1.65 million bpd.
“Recently, crude oil futures have lost some momentum amid uncertainty as traders prepare for potentially more supply returning to the market,” OPEC said. Meanwhile, OPEC raised its non-OPEC production 2018 outlook to 59.75 million bpd, up by 130,000 bpd from the April report, on growing shale production.
OPEC expects the rate of U.S. production growth to double vs. 2017, with total output reaching 10.51 million bpd. Later Tuesday, the U.S. Energy Information Administration raised its 2018 forecast for domestic output by 0.6% to 10.79 million bpd, but trimmed its 2019 forecast by 0.8% to 11.76 million bpd.
Brent oil prices fell 0.8% to $75.86 per barrel. U.S. crude reversed losses to rise 0.2% to $66.22 a barrel. Exxon Mobil (XOM) shares dipped 0.8% to 82.45 on the stock market today. The stock is forming a cup base with an 89.40 entry point. Chevron (CVX) eased 0.8% to 126.58. Shares are poised for a breakout from a cup-with-handle base with a 131.18 buy point. BP (BP) fell 2.55% but are now back in buy range. Royal Dutch Shell (RDSA) was down 2.4%.
The report comes ahead of OPEC’s biannual meeting on June 22, which will include top nonmembers like Russia, which has also boosted production lately. Russia and Saudi Arabia reportedly began discussions in April about an output hike. It would be the first since 2016 when they began cutting production by a 1.8 million bpd.
Saudi Arabia and its Gulf allies only want to raise output by 300,000 barrels per day, but Russia favors raising production by 800,000 bpd, sources told Bloomberg. However, Reuters sources said the two sides are looking at raising production by 1 million bpd. And the U.S. reportedly supports the output increase as gasoline prices surge to three year highs.
The Trump administration asked OPEC to raise oil output by 1 million barrels per day as gasoline prices reached their highest mark in over three years, according to Bloomberg. But Kuwait and Iran are reportedly concerned about the agreement between Saudi Arabia and Russia. On Wednesday, the Energy Information Administration will report weekly U.S. crude production and stockpile data. Investor’s Business Daily
