Oil prices drop as supplies increase

Crude Oil

The Organization of the Petroleum Exporting Countries and some non-OPEC producers, including Russian Federation, started withholding output in 2017 to reduce a global supply overhang and prices have risen by around 60 percent over the previous year.

U.S. crude inventories USOILC=ECI fell 4.1 million barrels last week, the Energy Information Administration said, exceeding analysts' expectations for a decrease of 2.7 million barrels.[EIA/S] Estimated U.S. gasoline demand hit a record high of 9.9 million barrels per day (bpd) in the week, the data showed. "Put the exports of crude on top of that, and it's just a really bullish report".

US production rose to 10.9 million barrels a day in the week, but Kilduff said the market appeared able to absorb the increase. "It seems like we need nearly every barrel of that to keep up with this refining demand".

The world's top crude producers are key partners in the OPEC+ deal, which is created to prop up oil prices by cutting global output.

The benchmark price of crude has surged from around $50 a barrel last summer to within a breath of $80 a barrel a few weeks ago.

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Most of the other OPEC nations are reportedly upset with Saudi Arabia for not consulting them prior to such comments and hints, and most of the OPEC members-excluding the Saudis and some of its Gulf allies (Kuwait, the UAE)-will not be able to lift production significantly in order to offset lower oil prices. "Not good!" the president said. However, its longer-term outlook suggested "prices are unlikely to increase as sharply as they did from mid-2017 onwards and thus the dampening effect on demand will be reduced".

American oil production has jumped by nearly a third in the last two years to a record 10.8 million barrels per day.

In April, Saudi Energy Minister Khaled al-Faleh said the global market has the capacity to absorb higher oil prices - a remark that drew a swift reaction Trump.

Fund manager Pierre Andurand at Andurand Capital was bullish.

President TrumpDonald John TrumpWhat you need to know about Tuesday's elections Danny Tarkanian wins Nevada GOP congressional primary Laxalt, Sisolak to face off in Nevada governor's race MORE focused on high oil prices in a tweet on Wednesday, again laying blame on OPEC.