Oil prices fall as OPEC increases production

Oil markets still pressured by persistent risk of oversupply

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The commodity fell further once United States inventory figures showed a significant jump in crude oil inventories. The U.S. government's supply report is due on Wednesday.

The analysts expect oil prices to remain range-bound throughout 2018 and in 2019, as lower Iranian supply and lower stocks will continue to be bullish factors, while trade tensions that could hurt oil demand and market sentiment, coupled with rising USA oil production would keep a lid on prices.

Prices rose amid fears of supply...

Oil prices jumped Monday as markets weighed OPEC production hitting its highest level this year against a war of words between the USA and Iran. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 1.2% at $67.95 a barrel.

Analysts polled by IG Group had expected a slight inventory decline of 200,000 barrels, after the previous week's major, 6.1-million-barrel draw reported by the EIA.

Brent crude, the global benchmark, fell by 6.5 per cent in July and was 1 per cent lower in NY last night at $74.25 a barrel, still 11 per cent higher since the start of the year.

Brent lost more than 6 percent in July, while USA crude futures slumped about 7 percent, the biggest monthly decline for both benchmarks since July 2016.

Meanwhile, U.S. sanctions on Iran that will come into force later this year will force a decline in exports and help support prices, analysts said.

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Brent crude ended the week up 1.7%, WTI added 0.6% - the first weekly gains for both contracts in four weeks.

Oil held an advance near $70 a barrel as the threat of production disruptions from the United Kingdom to Saudi Arabia loomed over global supplies. This pulled oil prices higher this week.

USA inventories are forecast to have fallen by 3 MMbbl last week, according to a Bloomberg survey of analysts before government data due Wednesday.

Kuwait confirmed on Wednesday it had increased production in July. On June 22-23, OPEC, Russia and other non-members agreed to return to 100 percent compliance with oil output cuts that began in January 2017, after months of underproduction in Venezuela and elsewhere pushed adherence above 160 percent.

According to the survey, which is based on external sources and shipping data, OPEC produced 32.64 million barrels per day (Mmbpd) of crude last month. "Market participants are awaiting additional tariffs by the US on the next tranche of imported goods from China".

Russia, Saudi Arabia and other producers last month agreed to boost production last month provided output remained below caps they agreed to in 2016.

The U.S. economy grew at its fastest pace in almost four years in the second quarter, but trade tensions remain high between Washington and Beijing despite an easing between the United States and the EU.

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