New York — Crude futures fell Friday on rising OPEC and Russian output and concerns that a trade dispute between the US and China will affect demand.
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Sign Up October ICE Brent settled 24 cents lower at $73.21/b, while September NYMEX crude settled 47 cents lower at $68.49/b.
OPEC produced 32.66 million b/d in July, up 340,000 b/d from June, according to an S&P Global Platts survey Friday, as increases from Saudi Arabia, Kuwait, Iraq, Algeria and the UAE offset declines from Libya and Venezuela.
Russia's crude output climbed nearly 150,000 b/d in July, the energy minister said Thursday, largely in line with Moscow's late-June agreement with OPEC. Russian output is now just 15,000 b/d below the record high of 11.23 million b/d set in October 2016.
"Rising Saudi Arabian and Russian oil supply, coupled with concerns about demand due to the further escalating trade conflict between the US and China, the two largest oil consumer countries, is weighing on the [Brent] price," Commerzbank analysts said in a note Friday.
Weekly rig data reported by Baker Hughes Friday did little to move the market. US rigs fell by four to 1,044 this week, while the Permian oil rig count was unchanged at 479. The Permian count has lingered between 473 and 479 since the end of May, reflecting a slowdown in activity on tight pipeline takeaway capacity, and suggesting production growth will slow.
US crude exports have slowed in recent weeks, likely because the US-China trade war has reduced flows to China, the single largest buyer of US crude in May. US Energy Information Administration data shows that on a four-week average basis US crude exports have slowed to 1.87 million b/d during the week that ended July 27 from 2.43 million b/d July 27.
With refinery maintenance season around the corner, US crude inventories could start to rise, especially if exports do not pick up again.
West African crude market sources Friday warned that reduced refinery runs would lead to higher US crude exports into Europe competing with Nigerian light sweet crudes.
The crude bears should keep in mind looming US sanctions on Iran, which are expected to remove up to 1 million b/d of crude from the market when they go into effect November 4.
Also, refined products remain relatively tight, as demand has been strong for gasoline and diesel.
Some refineries in Europe have reduced runs because of the current heat wave, lending support to gasoline prices, sources said Friday.
In NYMEX products, September RBOB settled 26 points lower at $2.0655/gal Friday, while September ULSD settled 49 points lower at $2.1269/gal.