Oil Prices Are Too High

President Donald Trump

Trump bashes OPEC for 'high' oil prices

Oil prices fell on Wednesday, hit by rising supplies in the USA and expectations that producer group Opec could relax voluntary output cuts.

Although Saudi Arabia has benefited from oil's rally over the last two years, the government relies on a strong security relationship with the USA, giving Washington some influence in the debate over OPEC policy.

Oil prices eased on Thursday, dragged down by rising output, although strong demand and a drop in U.S. fuel inventories provided the market with some support.

The idea of forming an oil bloc to counter OPEC's hegemony was mooted by Indian Petroleum Minister Dharmendra Pradhan during the International Energy Forum meeting in April in New Delhi.

A flag with the Organization of the Petroleum Exporting Countries (OPEC) logo is seen before a news conference at OPEC's headquarters in Vienna, Austria, December 10, 2016.

Data from secondary sources, reported by OPEC monthly, showed Tuesday Saudi Arabia's oil output in May was 9.98 MMBPD - which is a 85,500 BPD jump over April's output, Kallanish Energy learns.

"The United States shows by far the biggest gain (about 75 percent of the total across 2018 and 2019), but recently this expansion has not been without stress", the report said, referring to a gap in recent weeks between the USA and European oil futures contracts.

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President Donald Trump declared on Twitter that "oil prices are too high" and "OPEC is at it again", implying he believes the world's largest oil producers are constricting supply beyond what is reasonable to support their ailing economies.

The rising stocks are in part a result of the surge in USA crude oil production C-OUT-T-EIA, which has jumped by 28 percent in the last two years, to a record 10.8 million barrels per day (bpd). They have shown discipline in limiting production since the start of past year, helping push up the benchmark price of global crude.

"Even if the Iran-Venezuela supply gap is plugged, the market will be finely balanced next year and vulnerable to prices rising higher in the event of further disruption", the Paris-based agency said. Brent crude, the global oil benchmark, settled down 1% to $75.94 a barrel on London's Intercontinental Exchange.

Russian Federation and Saudi Arabia are leading a campaign to justify rolling back some of the OPEC/NOPEC production cuts, and are facing opposition from a bloc within OPEC consisting of Iran, Venezuela, and Iraq who oppose boosting production, also because those three don't have the spare capacity to lift production, unlike Russian Federation and the Saudis. "This outlook for second half of 2018 warrants close monitoring of the factors impacting both world oil demand and non-OPEC supply that will shape the outlook of the oil market going forward".

"Expect more of the same whippy markets driven by rumours and innuendo ahead of June 22 Vienna OPEC meeting", predicted OANDA analyst Stephen Innes.

Fund manager Pierre Andurand at Andurand Capital is bullish.

Oil prices were relatively flat in response to the uncertainty.

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