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Oil dropped to less than $ 75 a barrel in London after Saudi Arabia and Russia pledged an additional 1 million barrels of daily supply to ease consumer concerns.
Brent crude, a global benchmark, dropped 2.4 percent after Saudi Arabia's energy minister, Khalid Al-Falih, promised to act decisively to maintain Prices under control, sitting alongside his Russian counterpart Alexander Novak at OPEC headquarters in Vienna. Prices had climbed Friday, when the group of producers failed to specify the size of the increase. The Brent premium to the US benchmark Shrunk sharply.
The Saudis and Russia have confirmed that they will begin to put an end to the production restrictions put in place in early 2017, fearing that crude prices close to the three-year highs may begin to dampen economic growth and demand for oil. fuels. Saudi Arabia was also faced with pressure from US President Donald Trump, who criticized the group for keeping prices too high. Trump said he hoped the group would increase production substantially in a tweet on June 22, after the end of the ministerial meeting.
"After the ambiguous outcome of OPEC on Friday, Saudi Arabia and Russia have sought to regain control of the narrative," said Helima Croft, chief commodities strategist at RBC Capital Markets LLC in New York.
Saudi Minister of Energy Khalid Al-Falih reported that increase of nearly 1 million barrels a day after the Organization of Petroleum Exporting Countries has adopted a pact to increase production. He was trying to reassure the market after several cartel members said that the real increase would not reach 700,000 because some nations are unable to pump more.
The Brent futures contract for the August settlement fell from $ 1.81 to $ 73.74 a barrel on the ICE Futures Europe Exchange, and was trading at $ 74.80 at 10:18 am London. The contract earned $ 2.50 to settle at $ 75.55 a barrel on Friday.
In contrast, WTI crude for August delivery added 26 cents to 68.84 dollars a barrel. The contract jumped 4.6% to $ 68.58 on Friday. The total volume traded was 37% higher than the 100-day average.
The different reaction has reduced the Brent premium to less than $ 6 per barrel by more than $ 10 last week.
The agreement of the OPEC, which was concluded after a last minute compromise with Iran, is a victory for Saudi Arabia and Russia who both supported an increase. They now have more room to respond to supply risks and moderate prices at a time when US sanctions threaten to disrupt Iranian and Venezuelan exports.
See also: Perplexed by OPEC, hedge funds give way to oil in the air
Iran said he did not believe that buyers of his oil would obtain waivers from the US government after the renewal of Trump's sanctions. This is a signal that the Islamic Republic's exports could fall much further, faster than expected.
News from the oil market:
- Money Managers bullish ICE Brent crude bet 2,506 long-term net positions at 458,449, the weekly ICE Futures Europe futures and options data showed.
- China Crude imports fell from a record in May, customs data showed.
- Oil Explorers According to Baker Hughes, drilling was reduced in the United States last week for the first time in almost three months.
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