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Oil prices advanced slightly on Friday, trying in vain to limit the sharp weekly decline following a dip on Wednesday amidst trade and production tensions in Libya.
North Sea Brent crude barrel for delivery in September closed at $ 75.33 on the London Intercontinental Exchange (ICE), up 88 cents from Thursday's close.
On the New York Mercantile Exchange (Nymex), a barrel of light sweet crude (WTI) for the August contract took 68 cents to 70.33 dollars. The rise in prices was a little limited at the end of the session by the publication of an article in the Wall Street Journal (WSJ) claiming that the United States and Western officials are considering using strategic oil reserves if a increased production by Saudi Arabia and the OPEC countries was not enough to contain the rise in prices of black gold.
Over the week, the price of Brent fell by 2.62% and WTI of 4.05%, showing their second week of decline in a row. "In the absence of major news, the market tried Friday to resume some of its heavy losses accumulated this week," said James Williams of WTRG. Wednesday, the price of Brent had its heaviest fall in two and a half years and the WTI in one year as the escalation of trade tensions had continued between China and the United States, while Libyan oil fields had reopened . "Brokers seemed to reconsider the impact of the reopening of Libyan oil fields after their vehement reaction on Wednesday," said Williams.
Production of OPEC
Many badysts remain confident that prices will rise in the medium term, while the International Energy Agency (IEA) warned this week in a report that the risks of disruption
"The IEA predicts a more or less stable market in the second half of the year, but that does not take into account the losses in Iran," warned Commerzbank badysts.
As of November, Iranian oil importers could be sanctioned by the United States, and Washington has so far not granted an exemption.
"We believe that the administration of Donald Trump will not be able to to adopt a hard line on the subject "for fear of driving up the price of crude oil, have put Bank of America Merrill Lynch badysts into perspective.
World oil supply is being tightened. Saudi Arabia and Russia, two of the world's top three producers with the United States, announced at the end of June at a meeting of the Organization of the Petroleum Exporting Countries that they would increase production to offset these declines.
But the market doubts that the two giants will be able to increase their extractions in a sufficient volume. Russian Energy Minister Alexander Novak tried to rebadure him on Friday.
He claimed that the Organization of the Petroleum Exporting Countries (OPEC) and its ten partners could increase their production by more than one million barrels, however, saying that "oil prices are volatile (…) they also reflect the declarations on trade wars," Russian agencies reported.
"The world reserves capacity is currently extremely tight. the market is likely to be nervous by the time that production increases actually materialize, "Williams said.
Decline in Asia
Oil prices receded in Asia on Friday amid concerns over the trade war between China and the United States and resumption of supply in Libya.
03H10 GMT, the barrel of "light sweet crude" (WTI), the US crude, for delivery in August, lost three cents to 70.30 dollars in electronic trading in Asia.
The barrel of Brent of the North Sea, the main reference on the world market, was down 34 cents to 74.11 dollars.
"The markets are trying to recover after Wednesday's plunge but they are struggling," commented Stephen Innes, Analyst at Oanda.
At stake, "the trade war and the return of part of the supply", he said.
The United States announced Tuesday its intention to tax, to from September, 200 billion dollars of Chinese imports to the tune of 10% to add to the 50 billion taxed goods 25%
These new threats worry the markets who fear the consequences for world economic growth and oil demand.
"The latest news from Libya are bearish in the short term, with the reopening of the field al -Fil in the south for the first time since February, "said the badyst.
Thursday, Brent closed at 74.45 dollars on the Intercontinental Exchange (ICE) of London, up 1.05 dollar.
On the New York Mercantile Exchange (Nymex), the WTI lost 5 cents to 70.33 dollars.
Tensions on World Supply
The production problems affecting several major suppliers of black gold in the world will continue to weigh on the market this year, while room for maneuver elsewhere will become limited, a warned Thursday the International Energy Agency (IEA).
"Some of these difficulties on production should be solved, but the large number of disturbances remind us of the pressure on the world oil supply", warns IEA in its monthly report on oil.
For several weeks, Venezuela, Canada, Norway or Libya, even if the situation seems to improve for the latter, have seen their production drop or be penalized by problems on some sites.
Other producers, Saudi Arabia and Russia in the lead, compensated by pumping more crude and the world supply still grew by 370,000 barrels per day (b / j) in June to 98.8 million barrels per day (mbd), but according to the agency, "no sign" shows that this increase in production in countries that have the capacity will be sufficient to "appease fears of a contraction of the market ".
And "this will become an even greater problem, as the increase in production in the Gulf countries and in Russia, no matter how welcome, is at the expense of the safety mattress of available global capabilities. , which could reach its limits ", warns the energy arm of the OECD countries.
Worse to come
In June, the Libyan supply fell by 260,000 b / d due to the interruption of the majority of exports following the takeover of some facilities by the parallel authorities. The Libyan National Company, recognized by the international community, however announced Wednesday to have taken over the management of oil terminals.
Production continued to decline in Venezuela (-60,000 b / d), with no hope of a short-term rebound, according to the IEA, as in Angola (-60,000 b / d), as well as in Iran because of a decline in exports. And according to the IEA, the impact of the return of US sanctions will not be fully felt until later in the year.
In countries not members of the Organization of Petroleum Exporting Countries (OPEC), problems on certain sites and deposits in Alberta (Canada) and Norway have disrupted production, while social tensions between Shell and its employees in this country could still limit supply.
On the other hand, production in Brazil since the beginning of the year is lower than forecast.
Consequence: the IEA has slightly lowered to 1.97 mbd (against 2 mbj previously), its growth forecast of production excluding Opep for this year , and expects a "modest" rise of 1.84 mbd next year, with an expected slowdown in the United States.
"Vulnerability"
"This vulnerability currently supports oil prices and should continue to do so," says the agency. Although prices fell overall in June, they rose again at the end of the month with a rebound of 7% for North Sea Brent and 13% for light sweet crude (WTI) in New York. York
To ensure market stability, Saudi Arabia and Russia intensified production. The Saudi kingdom pumped an additional 430,000 b / d, and Russia nearly 100,000 b / d. And 24 countries, including members of OPEC and Russia, agreed on June 22 to increase production. Russia has said it is ready to add 200,000 bpd in the second half of 2018.
But only three countries – Saudi Arabia, the United Arab Emirates and Kuwait – have additional production capacity that can be mobilized immediately. continue to offset declines elsewhere in the world, says the agency.
They could add 500,000 b / d in July and Ryad plans to pump up to 11 mbj, which would reduce its capacity still available under 1 mbj, an "unprecedented", says the IEA, which alert for several months on the lack of global investment to put new capacity into service
In parallel, the IEA has maintained its growth forecast for world oil demand for 2018 and 2019 at 1.4 mbd.
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Using Strategic Reserves
The United States and Western Officials Consider Using Strategic Oil Reserves if Increased Production by Saudi Arabia and the OPEC Countries Is Not Enough to contain the rise in the price of black gold, says Friday the Wall Street Journal (WSJ).
"The Trump administration is actively debating the issue of digging into the country's strategic reserves, according to people close to the record" , writes the business paper.
"The talks are part of a broader effort to ensure that oil markets remain well supplied in a context of worldwide production disruptions and increased demand. WSJ.
The newspaper points out, however, that some of Donald Trump's advisers are strongly opposed to this idea and that the administration mainly wants to have different options or
Many badysts remain confident that oil prices will rise in the medium term, while the International Energy Agency (IEA) warned this week in a report that the risks of production disruption
According to the Agency, "there is no sign" that the increase in production in countries with the capacity to do so will be sufficient to "allay fears of a contraction of the market".
On Wednesday, Barclays badysts were already estimating that the governments of consumer countries could unlock their reserves of relief to prevent the price too high of the barrel weighing on their economies.
On July 3, John Kilduff, badyst at Again Capital, already evoked a rumor that the United States could "soon use its strategic reserves."
Farida B.
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