Big crude oil margins should boost US refiner earnings

Ivan Schwartz
July 21, 2018

Saudi Arabia's governor to the Organization of the Petroleum Exporting Countries (OPEC) says the kingdom's oil export will be little changed this month, dealing a setback to US President Donald Trump who had pinned hopes on Saudis to reduce oil prices in global markets.

West Texas Intermediate (WTI) crude futures rose 68 cents, or one percent, to settle at $68.76 a barrel.

"Saudi Arabia and several other OPEC members have increased exports sharply ahead of sanctions on Iran, and the timing mismatch between these effects is pressuring oil prices", said Martijn Rats, managing director at Morgan Stanley in London.

"Saudi Arabia and Russian Federation talking about supplying the markets, that would certainly have the potential to weigh on market sentiments", Lipow said.

Intercontinental Exchange Inc.is going to launch an oil futures contract with physical delivery in Houston as soon as this quarter.

More is likely to come to market before long, Rystad Energy said.

US drillers this week cut five oil rigs, the most since March, according to a Baker Hughes report, with the rate of growth slowing over the past month with recent declines in crude prices. USA light crude was 85 cents lower at $67.91.

The WSJ's report comes amid a growing reluctance by Western companies to buy Iranian oil and a hesitation by banks to finance energy deals in anticipation of U.S. sanctions.

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He said Saudi Arabia's crude oil exports in July would be roughly equal to June levels.

OPEC and non-OPEC producers cut oil output in June by 20 percent more than agreed levels, compared to 47 percent in May, two sources familiar with the matter told Reuters on Wednesday.

There was some support for prices based on comments from Saudi Arabia, the world's biggest oil exporter, that it would cut crude shipments. Also, Saudi Arabia, which has ratcheted production up, is unlikely to want to see prices go so low that they begin to threaten its goal of balancing the national budget.

The U.S. has been calling for a halt to oil imports from Iran by November 4.

"That's the takeaway from Wood Mackenzie's latest long-term outlook for global oil supply", reports OilPrice.com, an industry site.

Oil prices rose on Wednesday after US government data indicated bullish demand for gasoline and distillates, which overshadowed a surprise build in USA crude inventories and US crude oil production hitting 11 million bpd for the first time.

Production of crude topped 10.7 million barrels per day with production of natural gas hitting 4 million barrels per day, according to an analysis released by the American Petroleum Institute (API) Thursday.

Other reports by GizPress

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