Price of crude oil climbs in worldwide market

Chelsea West
March 14, 2018

Oil-market news. Futures sliding into contango is just one indicator signaling that prices may come under pressure President Donald Trump, ousting Secretary of State Rex Tillerson, said he had disagreed with the chief USA diplomat over a nuclear accord with Iran.

"Oil prices moved lower. after (the) Energy Information Administration published a report that crude production from seven major US shale plays is expected to see a climb", said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore.

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures finished lower on Monday on renewed concerns over rising U.S. production and tight OPEC supply.

That would be a reversal from a supply deficit in 2017 and early 2018.

Oil prices fell with the release of this EIA report on Monday and it looks like the downside pressure will continue on Tuesday.

Healthy demand and ongoing supply restraint by a group or producers led by the Organization of the Petroleum Exporting Countries (OPEC) and Russian Federation, however, have so far prevented further price falls.

Friday's strong USA payroll data, which showed a hefty 313,000 rise in jobs but tempered growth in hourly earnings, supported Treasuries in Monday trade.

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The EIA is due to publish its latest weekly USA production data on Wednesday.

Brent for May settlement sank 31 cents to settle $64.64/bbl on the London-based ICE Futures Europe exchange. "We need to see prices in the short-term trade below $60 to reduce that incentive for USA producers", he said.

The split is driven by differing views over whether $70 a barrel would send US shale companies into a production frenzy that could cause prices to crash.

That expected increase would top the 105,000 bpd climb in March from the previous month, to what was then expected to be a record high of 6.82 million bpd, the EIA said. Asia is the biggest buyer of the supplies.

According to Baker Hughes energy services firm, USA energy companies cut oil rigs for the first time in nearly two months, with drillers cutting back four rigs, to 796. That compared with analysts' expectations for an increase of 2 million barrels.

He concluded, "We think compliance is likely to slip; the deal will still officially be in place, but once we get into 2019 there's no chance that we will see some sort of deal".

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