After gains last week, oil prices flattened on Monday after an OPEC monitoring committee announced rising production amongst members of the cartel’s supply cut pact and concerns over the escalating US – China trade war. Equinor photo by Øyvind-Hagen.
WTI oil prices rose 4.3 per cent last week
After impressive gains last week, oil prices stalled on Monday after a report showed members participating in the OPEC supply cut agreement had increased production and concerns that the ongoing US – China trade war could impact global economic growth.
By 1:36 p.m., Brent crude futures were up 25 cents to $76.38/barrel and US West Texas Intermediate futures rose 12 cents to $68.84/barrel. The Canadian Crude Index climbed 16 cents to $43.37.
Last week, Brent crude jumped by 5.6 per cent and US WTI posted a 4.3 per cent gain.
But on Monday, oil prices hit a roadblock after market intelligence company Genscape reported that Cushing, Oklahoma, crude inventories rose about 764,000 barrels from Aug.21 through to Friday, August 24.
Another factor stalling oil price increases was an announcement by an OPEC and non-cartel members monitoring committee that reported producers in the cartel’s supply cut agreement cut their July production by 9 per cent more than agreed upon.
In June, participants had a compliance level of 120 per cent and 147 per cent in May, showing an increase in oil output by members.
OPEC along with Russia and other non-cartel participants in the pact agreed in June to return to 100 per cent compliance with the original output cuts of 1.8 million barrels per day (b/d) called for in the January 2017 agreement.
Under-production by Venezuela and some other producers had reduced output by 160 per cent of the group’s production goal.
Recent gains in oil prices have been attributed to concerns over anticipated cuts in the global crude supply due to US sanctions against Iranian crude exports which are set to begin in November.
“While the Iranian sanctions issue certainly isn’t new news, suggestions out of the White House that waivers will be restricted appeared to augment last week’s price gains,” Reuters reports Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.
Iran’s state run news agency IRNA reported that Iranian President Hassan Rouhani called French President Emmanuel Macron, looking for guarantees from Europe on banking channels and oil sales as well as insurance and transportation.
Many traders continue to be concerned that the escalating trade war between the Trump administration and Beijing could slow economic growth and dampen energy demand.
However, Unipec, a subsidiary of China’s oil and gas company Sinopec, says it will resume purchases of US oil beginning in October after a two-month stoppage in sales due to the trade dispute, according to three Reuters’ sources.