Rise in US stockpile sees oil prices sink

Rise in US stockpile sees oil prices sink

"It's duck and cover and keep an eye on your Twitter feed".

Production of crude oil is expected to stay at record highs for the time being despite pipeline constraints in the Permian-the top performer in the USA oil patch.

Meanwhile, Brent lost almost $11 over three sessions spread throughout the first four weeks of July.

"The risk premium for Brent is definitely on right now given the war of words we've seen against Iran - in general, political instability", said Ashley Petersen, lead oil analyst at Stratas Advisors in NY. The State Department last month called on all countries to stop importing Iranian oil by November as part of that move.

"Iran already produced less oil in July, whereas the Arab Gulf neighboring states produced more".

Gasoline stocks USOILG=ECI fell 2.5 million barrels, compared with analysts' expectations in a Reuters poll for a 1.3 million-barrel drop. The White House later walked back that claim, saying the king would take an increase under consideration.

The average daily throughput of refineries stood at 17.5 million barrels of crude, nearly 200,000 bpd more than in the previous week, with the facilities operating at 96.1 percent of capacity.

Saudi Arabia said the decision would translate into an output rise of about one million bpd. Both headlines suggested that Saudi Arabia and Moscow were making good on their vow to raise output to prevent the market from overheating.

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US inventories are forecast to have fallen by 3 MMbbl last week, according to a Bloomberg survey of analysts before government data due Wednesday. Refineries produced 5.2 million barrels of distillates daily last week, basically unchanged from a week earlier. This will also mean higher prices.

In July, Brent fell more than 6% and USA crude slumped about 7%, the biggest monthly declines for both benchmarks since July 2016.

Manufacturing across Asia slowed in July, deepening concerns about the region's economic outlook as the U.S.

Trade tensions also remained in focus following reports the Trump administration is considering imposing additional tariffs on Chinese imports.

"The market is facing different questions - Is global demand slowing due to weakening worldwide economic growth, will US production keep up its incredible pace, will output in Venezuela keep plummeting, what will USA sanctions do to Iranian production, and is OPEC really willing to raise output up to 1 mbpd!"

The final big drop came the following week later on July 16, with us crude down nearly $3 a barrel and Brent dropping almost $3.50.

OPEC and non-OPEC producers reached an agreement in December 2016 to curtail oil output jointly and ease a global glut after more than two years of low prices. The first two days of this week were illustrative: Monday saw a gain of more than 1% in the price of West Texas Intermediate (WTI); Tuesday saw a drop of the same size. Brent fell toward $74, down about 6.5 percent in July.

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