Published: Mon, June 19, 2017
Economy | By Annette Adams

Crude Oil Tumbles To Lowest Since November

Crude Oil Tumbles To Lowest Since November

The agency continued to forecast an implied shortfall insupply relative to demand for the second quarter of this year.But it said slowing demand growth in China and Europe inparticular, as well as increasing supply, meant the deficitshould narrow to 500,000 bpd from a prior estimate of 700,000.

And it was being observed, "despite the very high overall conformity to the production adjustments in the first four months of 2017", OPEC added.

Investor disappointment from the OPEC report eased later during the session as investor focus shifted to weekly inventory data from the Energy Information Administration (NYSEMKT:EIA) expected to show that crude stockpiles fell by more than 2 million barrels for the week ended June 2.

In November previous year, when OPEC members agreed to cut production for the first time since the Great Recession, it was welcomed with great optimism and oil price jumped more than 20 percent, from $45 per barrel to as high as $55 per barrel (WTI).

Some traders still hope that Wednesday's readings from the US government will show declining inventories for oil and gasoline, as numbers from the Energy Information Administration don't always match those from the API.

"Should OPEC solve the problem of the overhang this year, it is just going to come back next year, so in any case their options are quite limited", said Mr. Weinberg.

The dollar .DXY rose to its highest in more than two weeks, further weighing on oil by making it more expensive for buyers using other currencies. The International Energy Agency is predicting an even larger increase.

The oversupply continues to threaten the commodity since late last month; according to some data provided by the American Petroleum Institute, it revealed that a steady growing of oversupply by 2.8 million barrels last week till June 9. Even so, output from USA shale and other non-OPEC sources will essentially capture the entire gain. Prices are down 2.6 percent this week.

"We need to see a sign that the OPEC cuts are having an impact on world oil supplies and it's clearly not, at least not yet", said Tamar Essner, lead energy analyst at Nasdaq. However, this scenario is more likely in countries that are primarily producers and exporters, rather than consumers, of oil. "Oil production in the US was. higher (and) oil tanker tracker data also suggests OPEC shipments remain strong", ANZ bank said.

US crude futures tumbled 3.7% to $44.73 a barrel.

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