Oil prices dip on fears Middle East rift could harm OPEC cuts

Oil prices dip on fears Middle East rift could harm OPEC cuts

Futures fell as much as 4.7 percent in NY after the Energy Information Administration said American crude supplies rose by 3.3 million barrels last week, following eight straight weeks of declines.

Ahead, the American Petroleum Institute (API) will release its estimates of crude and refined product inventories at the end of last week, followed by the Energy Information Administration (EIA) with official data on Wednesday. Worldwide factors include the fact that South Africa imports both crude oil and finished products at a price set at the Global level, including shipping costs. Crude stockpiles at the Cushing oil hub in Oklahoma fell 1.4M barrels last week. The declines in the global crude oil market also trickled down to the energy sector of the US stock market as the S&P 500 energy sector lost 1.8% in the trading session.

A weekly report from the Energy Information Administration on Wednesday showed USA crude, gasoline and distillates stocks swelled in the week ended May 26.

The bearish report represents the first crude inventory build in several weeks and lends credit to recent sentiment over US shale production rising at a pace that could in part offset a production cut from the Organization of the Petroleum Exporting Countries.

USA crude production has jumped over 10 per cent since mid-2016 to 9.34 million bpd, levels close to top producers Russian Federation and Saudi Arabia.

London Fire: Likely Grenfell Tower Death Toll Rises to 79
Metropolitan Police Commander Stuart Cundy said that five of those people have been formally identified so far. Police had earlier put the toll from Wednesday's inferno at 58 presumed dead.

Saudi Arabia as well as the United Arab Emirates, Egypt, and Bahrain severed ties with top liquefied natural gas (LNG) and condensate shipper Qatar on Monday, accusing it of supporting extremism and undermining regional stability.

"This is really unexpected", Gene McGillian, market research manager at Tradition Energy in Stamford, Connecticut, said by telephone.

Traders believe that the reduction in production of oil by OPEC member countries is one of the reasons why prices are going up. The global benchmark crude traded at a premium of $1.75 to WTI, the lowest since February.

Royal Dutch Shell (RDSa.L) lifted force majeure on exports of Nigeria's Forcados crude oil, bringing all of the country's oil exports fully online for the first time in 16 months. "But if, as we have already seen, higher refinery runs and/or crude exports are the causes of these inventory drawdowns, then the impact on Opec's balancing act is actually negative".

US West Texas Intermediate futures settled 26 cents or 0.55 per cent lower at US$47.40. Last month, OPEC producers and 11 participating non-OPEC countries including Russian Federation formally ratified the agreement first drafted last November to cut supplies by 1.76 million barrels per day.

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