Published: Tue, June 12, 2018
Markets | By Otis Pena

Oil Edges Up Ahead of OPEC Market Report

All three major USA stock indexes were trading in positive territory on Monday, just hours ahead of the meeting in Singapore between President Donald Trump and North Korean leader Kim Jong Un.

The global oil oversupply that drove USA crude oil prices to around $30 a barrel has now been worked off, according to OPEC, but still the group says the outlook for second half of the year for the market is highly uncertain.

Non-OPEC suppliers include the United States where producers have returned to the business in droves, encouraged by rising prices.

Going into next year, the bank said "oil fundamentals are expected to weaken in 2019 on the back of stronger than expected non-OPEC supply but also potential release of barrels from OPEC as the joint accord between OPEC and non-OPEC is unlikely to stay in place".

The oil price has risen steadily over the past year, with Brent crude establishing itself above $70 for the first time in years last month - some 30 percent higher than at the same time in 2017.

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It said on Saturday that Russia's oil output had risen to 11.1 million bpd in early June, up from slightly less than 11 million bpd for most of May and above its target output of under 11 million bpd.

Oil prices were little changed on Monday as comments from the Iraqi oil minister cast doubt as to whether the Organization of the Petroleum Exporting Countries would decide to boost output at its upcoming meeting. According to Baker Hughes, the rig count rose by one last week to 862, it's highest since March 2015.

"Expect more of the same whippy markets driven by rumours and innuendo ahead of June 22 Vienna OPEC meeting", predicted OANDA analyst Stephen Innes.

Saudi Arabia boosted daily oil output in May to the highest level since October, ahead of meetings with Russian Federation and other global producers next week where they may propose raising production even further and phasing out 18 months of voluntary cuts.

In other words, while some analysts still wonder if the reports about Russian Federation and Saudi Arabia discussing a production increase of 1 million bpd are just speculation or an action plan, the increase is already happening and it is making at least one other OPEC member unhappy.

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