Oil prices rallied on Wednesday afternoon despite the fact that OPEC/NOPEC’s compliance fell from 147 percent in May to around 120 in June, according to sources cited by Reuters.
At 9:15pm EDT on Thursday, WTI was trading down 1.00% at $67.07, while Brent crude was trading down 0.78% at $72.33. Both benchmarks were trading down for the week. Earlier in the day, the Energy Information Administration (EIA) had reported a surprise build in crude oil, with prices set to fall on the news.
OPEC’s compliance to the production cut deal forged in November 2016 reached 181 percent in April 2018 before falling to 147 percent in May.
The previously higher oil prices as the result of OPEC’s overachievement of the production cut deal also resulted in corresponding high prices at the pump. President Donald Trump has repeatedly called out the cartel for its manipulation of prices using his favorite medium: Twitter. “Oil prices are too high, OPEC is at it again. Not good!” one of Trump’s Tweets read a few weeks ago. That Tweet was followed just days later with yet another dig at OPEC: “OPEC is at it again.”
In late June, OPEC had agreed to back off its overzealous commitment to the production cut deal and bring its production up so its compliance would be closer to 100%. Many had assumed that it would be Saudi Arabia and Russia who would shoulder the burden of increasing oil production to come closer to the original terms of the deal. Both Saudi Arabia and Russia have sent positive signals to the market that they are willing to increase production to ensure a well-supplied market.
Russia started to increase production even before the meeting took place in June, raising production to 11.09 million barrels of crude oil per day in the first week of June.
By Julianne Geiger for Oilprice.com
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