Oil slips on worries Middle East rift could undermine OPEC cuts

Oil slips on worries Middle East rift could undermine OPEC cuts

"The OPEC agreement stands and is highly unlikely to change because of tension with Qatar. crude production in the Middle East and it will not change because of Qatar", said Oystein Berentsen, managing director for oil trading company Strong Petroleum.

The EIA (U.S. Energy Information Administration) will release its weekly crude oil inventory report on June 7, 2017.

Inventories of USA crude rose by roughly 3.3m barrels in the week ended May 26, confounding expectations of draw of around 3.5m barrels.

This is why Saudi cargoes to the U.S.in recent months have totaled 1.21 million barrels a day - the highest rates since 2014, the year of the oil price crash. US light crude prices were at $46.12 USA per barrel, downward $2.07 cents, or 4.3%. In addition, OPEC is allowing Iran to continue to increase its production levels up to 3.797 million barrels per day.

The United States has begun importing Iraqi oil at a rate of 1.1 million barrels per day to replace export cuts announced by Saudi Arabia late last month, new figures compiled by Bloomberg show.

USA crude oil inventories rose unexpectedly last week amid lower refinery runs and exports. The organization members and other producers, including Russian Federation, had pledged to cut output by about 1.8 million barrels per day in order to shore up oil prices.

US West Texas Intermediate (WTI) crude futures were at $47.98 per barrel, down 21 cents, or 0.4 per cent, from their previous close, and down over 6 per cent from May 25.

Crude output in the United States, which is not a participant in the deal, has grown over 10 percent since a year ago to 9.34 million barrels per day, approaching the levels of top producers Saudi Arabia and Russian Federation.

Some analysts saw a risk that rivalries between OPEC members could weaken the production cut agreement.

US crude oil prices recovered to trade roughly flat on Thursday, after falling to levels that put the commodity on track for its lowest close in more than six months. De facto OPEC leader Saudi Arabia and the United Arab Emirates have cut diplomatic ties with Doha. Brent crude, the benchmark for more than half the world's oil, is projected to average $55.61 next year and $52.69 this year, compared with prior estimates of $57.10 and $52.60. The declines in the global crude oil market also trickled down to the energy sector of the USA stock market as the S&P 500 energy sector lost 1.8% in the trading session.

OPEC and other producers including Russian Federation have pledged to cut output by about 1.8 million barrels per day (bpd).

Prices initially surged on Monday before settling lower as the spat was seen having a limited impact on oil supply. That's up from 9.96 million barrels projected in May.

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