U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher early Thursday, continuing to be supported by lower U.S. crude oil inventories and global supply worries. Given the Kingdom's preference for Brent prices above $80/barrel, OPEC may not increase supply unless prices remain elevated.
Net U.S. crude imports fell last week by 106,000 barrels per day.
Analysts argued that the continued drawdowns in oil stockpiles, even though we are past the summer driving season, are a result of increased USA crude oil exports, which have been supported by the widening differential between USA benchmark WTI prices and the global benchmark, Brent crude.
According to Tamas Varga, a strategist with PVM Oil Associates, the question is not about the price movements being justified, rather, the current dictator of crude oil's price is the ability of producers to supply the amount of oil actually needed.
Stephen Innes, head of trading for Asia-Pacific at OANDA in Singapore, said Trump's remarks just days before the OPEC meeting put "a focus on the likely supply impacts of USA -led Iran sanctions".
"We're stuck in a range here", said Tariq Zahir, managing member at Tyche Capital Advisors in NY, with prices supported by the USA sanctions on Iranian supplies and pressured by the potential that Chinese demand could wane.More news: Livewire Xherdan Shaqiri earns the spotlight on his first Liverpool start
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Crude inventories fell by 2.1 million barrels, compared with expectations for a decrease of 2.7 million barrels.
"Investors are now assessing the Saudis' mixed message on oil prices versus its earlier pledge to increase output", said Hong Sungki, a commodities trader at NH Investment & Securities Co.in Seoul. The price of oil is up 7 percent in the last month and almost 18 percent for 2018.
Meanwhile, EIA reported that the estimated weekly USA crude oil production went up 100,000 to 11 million barrels per day during last week.
The Organization of the Petroleum Exporting Countries and other producers including Russian Federation meet on Sunday in Algeria to discuss how to allocate supply increases within their quota framework to offset the loss of Iranian supply. Exports averaged 2.37 million barrels a day last week and have a cumulative daily average for the year of 1.81 million barrels a day, a 137% increase over the year-ago export total.
USA crude oil exports averaged 2.37 million barrels per day last week, up 539,000 barrels per day from the previous week. Brent Crude oil prices were 48 percent higher in Q2 2018 than in Q2 2017 and averaged $75 per barrel, the highest since the fourth quarter of 2014, EIA data showed. The EIA said the United States likely now leads the world in crude oil production, moving past Saudi Arabia and Russian Federation.
That was mostly due to the higher oil prices.