Oil Rises as Saudi Forecast a Decline in Export in August

Media: Japan halts imports of oil from Iran

The discount on crude prices in Midland, Texas widened by almost $10 a barrel against benchmark futures during the second quarter, as production in the Permian surged beyond pipeline capacity to move oil out of the region.

The International Energy Agency reported that Saudi Arabia boosted production sharply last month, raising crude shipments to world markets by 390,000 bpd to 7.6 million bpd.

Trade tensions continued to weigh on the market, providing a ceiling for any gains, traders said. Many countries are seeking a USA pardon to continue importing Iranian oil.

But the spectre of oversupply quickly returned, with a rise of more than 600,000 barrels in US crude stockpiles, reported by the American Petroleum Institute late on Tuesday.

Refiners such as Delek US Holdings Inc and HollyFrontier, which source a majority of their crude from the Permian and are capable of processing mostly light, sweet crude, stand to benefit from cheap feedstock. But following the lift in worldwide sanctions on Iran in 2016, the Middle Eastern country's share within Korea's total crude oil imports sharply expanded to 10.38 percent in 2016 and 13.2 percent in 2017. They also want to be able to sell oil at a higher price because they will need more revenue and Iran wants to say that if the Saudis and Russians raise production, it could end the historic OPEC/Non-OPEC pact.

Aama further noted that Saudi Arabia will not substantially oversupply the market, dismissing concerns over an oil glut as baseless.

Meanwhile, OPEC and non-OPEC's compliance with oil output curbs declined to around 120 per cent in June from 147 per cent in May, two sources familiar with the matter told Reuters on Wednesday.

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But today, Adeeb Al-Aama, Saudi Arabia's OPEC governor, said that the Kingdom's July crude oil exports would be similar to June's, and that August's exports would be 100,000 bpd below that. Total commercial petroleum inventories increased by 6.0 million barrels last week.

Still, overnight oil is weak as the us dollar soars and other commodities get crushed.

Looking at other news, OPEC and non-OPEC compliance with recent supply restrictions is now running at 120% according to anonymous sources who spoke to Reuters.

Crude oil and natural gas production hit a new record in June with the highest production ever in the U.S.

With so many factors shifting the balance between global supply and demand, the appetite for additional Saudi crude may change, especially as the extent of Iran's losses becomes clearer.

The Energy Information Administration reported U.S. crude inventories rose by 5.84 million barrels last week, confounding most analysts in a Bloomberg survey who were forecasting a decline.

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