- The Writer holds an MSc from Creighton University and is a Ph.D. candidate in the Turkish National Police Academy
Brent oil saw prices peaks over $53 but generally sustained over $50 per barrel last week. This was due to further drops in U.S. oil inventories, the dwindling pace of U.S. crude oil production and the oil rig count along with a relatively weaker U.S. dollar. However, prices failed to endure over $53 due to greater OPEC oil production and increased global supply for the past three months.
Oil markets last week will be reviewed based on the U.S. dollar index, weekly American Petroleum Institute (API) and Energy Information Administration (EIA) crude oil inventories, weekly EIA field production of crude oil in the U.S. and the weekly U.S. Baker Hughes rig count.
Brent oil price began the week with a slight fall to $52.37 despite the one rig-count decline as reported in the U.S. Baker Hughes data from the previous week and a slight decrease in the U.S. dollar index. The price dropped to $52.14 on Tuesday due to the rise in the U.S. dollar index, despite a weekly decrease of 7.84 million barrels in U.S. oil inventories as detailed in the weekly API report.
However, it recuperated to $52.70 on Wednesday through a fall of 6.45 million barrels in U.S. oil inventories, according to the Energy Information Administration’s (EIA) weekly report as well as a downturn in the U.S. dollar index. The drop in U.S. crude oil production of around 7,000 barrels per day to 9.42 million barrels per day for the week ending Aug. 4, as reported by the U.S.’ weekly EIA crude oil production report also supported such a price recovery.
On Thursday, the price slumped to $51.90 with OPEC’s monthly report showing that OPEC production surged by 173 thousand barrels per day to around 32.87 million barrels per day in July.
Brent settled at $52.10 at the end of the week with a sharp decline in the U.S. dollar index despite a three-count rise in the weekly U.S. rig count as per Baker Hughes data.
In brief, last week Brent oil slightly declined to $52.10 from $52.42 mainly through OPEC’s production rise in July 2017.
OPEC released its August report announcing a production rise to average 32.87 million barrels per day – above the 32.50 million barrels per day target. This production rise stemmed mainly from greater output from Libya and Nigeria. This report followed three consecutive months from May of the cartel’s increased oil production. According to International Energy Agency (IEA) global oil supply grew by 520 thousand barrels per day in July compared to June.
The extraordinary meeting of some OPEC and non-OPEC countries was held on Aug. 7-8 in Abu Dhabi, U.A.E. with the aim of boosting conformity levels in the oil cut agreement to rebalance oil markets. According to the press release following the meeting, discussions were very constructive and fruitful.
The U.A.E., Iraq, Kazakhstan, and Malaysia all expressed their supports for and their eagerness to cooperate more with the Joint OPEC-Non-OPEC Technical Committee (JTC) and the Joint OPEC-Non-OPEC Ministerial Monitoring Committee (JMMC) to ensure full conformity to the oil cut pact. This significance of this extraordinary meeting could be seen in laying the groundwork for further cut decisions to be taken at the next OPEC and non-OPEC JTC meeting scheduled for Aug. 21, in Vienna, Austria.
This week, fluctuations in the Brent oil price between $50 and $53 may be seen if further strong declines in U.S. oil production and oil inventories persist, If not and with the recovery in the U.S. dollar, declines below $50 are likely.
- Opinions expressed in this piece are the author’s own and do not necessarily reflect Anadolu Agency's editorial policy.