SD: Oil Near Six-Week Low Amid Speculation OPEC Will Keep Pumping
(Bloomberg) -- Oil traded near its lowest closing price in six weeks amid speculation that OPEC will stick to its strategy of maintaining output to pressure higher-cost producers to curb a surplus.
Futures were little changed in London after the biggest two-day drop since March. Iraq plans to raise exports to a record in June, signaling an escalation of a strategy to defend market share that has seen the Organization of Petroleum Exporting Countries exceed its output target for 11 months straight. U.S. crude inventories probably fell by 2 million barrels through May 22, a Bloomberg survey showed before an Energy Information Administration report Thursday.
Oil’s recovery from a six-year low faltered this month near $60 a barrel amid speculation that a supply glut will persist. Crude stockpiles in the U.S. remain near the highest level since 1930 and 100 million barrels above the five-year average for this time of the year, according to the EIA. All but one of 34 analysts and traders surveyed by Bloomberg predicted OPEC will maintain its production target on June 5.
“The market is watching U.S. inventories, but the OPEC meeting is on everyone’s mind,” Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt, said by phone. “There is consensus that OPEC will not change its official policy.”
Brent for July settlement climbed 24 cents, or 0.4 percent, to $62.30 a barrel on the London-based ICE Futures Europe exchange at 12:36 p.m. local time. It fell $1.66 to $62.06 Wednesday, the lowest closing price since April 15. The European benchmark crude traded at a premium of $4.83 to WTI.
OPEC Shipments
West Texas Intermediate for July delivery was little changed at $57.52 a barrel in electronic trading on the New York Mercantile Exchange. The contract dropped 5.3 percent in the previous three sessions, the most since March 31. Prices are down 3.5 percent this month.
Iraq plans to boost crude exports by about 26 percent to a record 3.75 million barrels a day next month, according to shipping programs. The additional oil is equal to about 800,000 barrels a day, or more than comes from OPEC member Qatar. The country’s actual exports have fallen short of scheduled shipments in three out of four months this year, according to Oil Ministry data.
The tanker market is signaling oil’s rally may be under threat. A surge in demand for supertankers drove benchmark charter rates 57 percent higher in the two weeks to May 20. OPEC will have almost half a billion barrels of oil in transit to buyers at the start of June, the most this year, while analysts estimated about 20 million is being stored on ships.
U.S. Stockpiles
U.S. crude inventories decreased to 482.2 million barrels through May 15, according to the EIA. Supplies remain near the highest level in 85 years, based on monthly records from the Energy Department’s statistical arm dating back to 1920.
Stockpiles expanded by 1.3 million barrels last week, the American Petroleum Institute reported Wednesday, according to ForexLive. Supplies at Cushing, Oklahoma, the delivery point for WTI contracts and the nation’s biggest oil-storage hub, slid by 72,000 barrels, according to the industry group in Washington.
Venezuelan President Nicolas Maduro said Russia and his country will invest over $14 billion to double oil production in joint projects. Investments will include the Orinoco Belt and natural gas projects, Maduro said on Venezuelan state television after meeting OAO Rosneft head Igor Sechin in Moscow.
During Maduro’s visit, Russian Energy Minister Alexander Novak discussed the market situation and mutual projects with Venezuela’s Oil Minister Asdrubal Chavez.
Canada Wildfires
Venezuela is among the 12 members of OPEC who agreed in November to maintain their collective output target of 30 million barrels a day. The group, which pumps about 40 percent of the world’s oil, exceeded its quota for an 11th consecutive month in April, according to data compiled by Bloomberg.
In Canada, Northern Alberta firefighters battled a wildfire that moved within 5 kilometers (3.1 miles) of Cenovus Energy Inc.’s oil sands operations. Wildfires have prompted the shutdown of 230,000 barrels a day of oil-sands output, about 10 percent of the nation’s production.
