Oil rises on signs of U.S. inventory declines, lower Saudi exports

Oil rises on signs of U.S. inventory declines, lower Saudi exports

OPEC's output rose 1% to over 32.14 million barrels in May.

"Brent spreads are getting clobbered", said Amrita Sen, chief oil market analyst at consultants Energy Aspects Ltd.in London.

Echoing similar views, Ole Hansen, head of commodity strategy at Saxo Bank said Opec's agreement to extend production cuts for another nine months has so far had a limited impact.

Benchmark Brent crude was 17 cents lower at $48.12 per barrel, reversing gains made earlier in the session when it edged up to $48.67. It gained global market share for a second year in a row after 15 years of declines between 1999 and 2014, the BP report said.

On May 25, Opec and non-Opec members led by Russian Federation chose to extend the production cut agreement by another nine months till March next year to balance oil markets.

The return of a deep contango - when oil prices for immediate delivery are lower than forward contracts - comes days after several Wall Street banks warned investors of a deteriorating outlook for 2018 because of strong USA shale production growth and the rising output in Nigeria and Libya.

The May unemployment rate in the United States was at its lowest in years, though marginal issues, such as lower hourly wages and a decline in the number of people participating in the labor sector, were disappointing. Roughly 40% of the group's cuts have come from OPEC's de facto leader, but summertime temperatures are also beginning to weigh on the kingdom's exports.

US crude inventories remain stubbornly high.

"While the jobs gap is closing, many people do not feel the benefits as they are facing stagnant wages and no career prospects", OECD Secretary-General Angel Gurria said in a statement. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or now may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services.

And global coal consumption fell by 1.7% last year-down a second straight year, with the largest declines seen in the USA, where it fell by 8.8%, and in China, down 1.6%. Ironically, the announcement failed to offer impetus to prices. a href="http://blog.jpmorganinstitutional.com/2017/05/opec-really-whatever-takes/" Ebele Kemery, head of energy investing at JPMorgan Asset Management, believes the 8-month extension would cushion the oil prices.

Notwithstanding OPEC production cuts that would stay until March next year and the fairly robust demand outlook, oil prices are not expected to move much beyond the year's trading range, given the limited visibility into the OPEC's future course of action and the robust production expectations. OPEC will hold its next meeting in Moscow next month.

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