Crude oil futures climb 1.46% on firm global cues

Saudi Arabia reins in oil production as demand forecasts waver

Incremental production of oil, [natural gas liquids] NGLs and condensate could come from several projects, such as Uvat, East-Siberian, Vankorneft, Messoyakha and Yamal LNG", Opec said, reports Tass.

The organization reviewed its 2018 forecast and increased production by 1.64 million barrels per day (Mmbdp), to reach an average of 98.83 Mmbpd. Expectations of this week's drop resumes the inventory decline trend that begun in mid-May and was interrupted by a 3.8 million-barrel build in the week ended July 27.

OPEC expects the demand for its crude to be 32.9 million barrels a day this year, about 600,000 barrels a day lower than in 2017. Under the production cuts initiated in January, Saudi Arabia's quota is 10.058 million barrels a day.

Saudi Arabia cutting its oil production in July and the prospect of continued strength in the US dollar may not seem to have anything in common; but both are yet more indicators that crude prices will likely continue to drop in the foreseeable future, according to the experts.

In February, Saudi Arabia freed nine Iranian fishermen detained for two years, accusing them of entering its waters. Saudi Arabia production fell by 200,000 bpd to 10.288 million bpd.

The report warned that "if any unexpected supply outages should occur due to natural disasters/technical shortcomings and these coincide with any geopolitical supply disruption, it could bring the market into an imbalanced situation", adding that industry investment had yet to recover to levels seen before the 2014 price crash.

While OPEC output rose in July, the group also lifted forecasts for supply from its rivals for the rest of the year.

Despite the slight reduction in forecasts, Opec indicated the robust growth in demand is driving global oil markets into deficit.

At the same time, OPEC lowered its global oil-demand growth estimate by 20,000 barrels a day, to 1.64 million barrels a day this year.

"But it could succumb to further bouts of bearishness on account of demand worries", she added.

Trade tensions with the US have weakened currencies in emerging markets as investors pull cash out of countries like India and China and convert it to USA dollars, which are still seen as a safe haven.

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