Get more Mail & Guardian
Subscribe or Login

Oil futures slump as Opec keeps pumping

Oil fell after the International Energy Agency said this year’s price rally is under threat, with the biggest members of the Organisation of Petroleum Exporting Countries (Opec) pumping record amounts of crude.

Futures dropped as much as 0.8% in London, reversing an earlier gain of 0.6%. Saudi Arabia, Iraq and the United Arab Emirates each produced record amounts of oil in May, the agency said. The Paris-based adviser to 29 industrialised nations also raised its forecast for global demand growth this year by 0.3 percentage points.

“The fact remains that Opec will produce one million barrels a day in the second half of this year, more than is required,” Ole Hansen, the head of commodity strategy at Copenhagen-based Saxon Bank A/S, said. “The demand growth revision gave oil an initial boost.”

Oil’s recovery from a six-year low has slowed amid speculation that global production will expand as prices rebound, prolonging a surplus. Opec last week decided to maintain its quota as it sought to defend market share against higher-cost producers.

Brent for July settlement fell as much as 55c to $65.15 a barrel on the London-based ICE Futures Europe exchange and traded at $65.22 at 10.38am local time. It gained 82c to reach $65.70 on Wednesday. The European benchmark crude traded at a premium of $4.48 to West Texas Intermediate (WTI).

WTI for July delivery fell 65c, or 1.1%, to $60.78 a barrel in electronic trading on the New York Mercantile Exchange. The contract climbed $1.29 to $61.43 on Wednesday. The volume of all futures traded was about 26% below the 100-day average for the time of day. Prices are up 14% this year.

Saudi Arabia, the world’s largest crude exporter, boosted output to 10.25-million barrels a day last month from 10.16-million in April, the agency said. Output from Opec, which provides about 40% of the world’s oil, rose by 50 000 barrels a day to 31.33-million barrels a day, the highest level since August 2012.

“Barring unforeseen outages, Opec is likely to keep pumping at around 31-million barrels a day during the coming months as Middle East producers sustain higher rates to preserve market share,” the report said.

The energy agency boosted its 2015 estimates for global oil demand by 320 000 barrels a day from last month to 94-million barrels a day. Momentum for demand growth will probably ease somewhat in the second half of this year, partly due to a deterioration in economic prospects for developed countries, it said.

“Today’s report was rather mixed – it still shows that there is excess production,” UBS Group AG’s Giovanni Staunovo said. – © Bloomberg

Subscribe for R500/year

Thanks for enjoying the Mail & Guardian, we’re proud of our 36 year history, throughout which we have delivered to readers the most important, unbiased stories in South Africa. Good journalism costs, though, and right from our very first edition we’ve relied on reader subscriptions to protect our independence.

Digital subscribers get access to all of our award-winning journalism, including premium features, as well as exclusive events, newsletters, webinars and the cryptic crossword. Click here to find out how to join them and get a 57% discount in your first year.

Angelina Rascouet
Angelina Rascouet works from Paris, France. Bloomberg News- Media/telco/entertainment reporter recently relocated to Paris- previously covering OPEC/oil. Tweets mine. RT not endorsement. Angelina Rascouet has over 3541 followers on Twitter.

Related stories

WELCOME TO YOUR M&G

If you’re reading this, you clearly have great taste

If you haven’t already, you can subscribe to the Mail & Guardian for less than the cost of a cup of coffee a week, and get more great reads.

Already a subscriber? Sign in here

Advertising

Subscribers only

Fears of violence persist a year after the murder of...

The court battle to stop coal mining in rural KwaZulu-Natal has heightened the sense of danger among environmental activists

Data shows EFF has lower negative sentiment online among voters...

The EFF has a stronger online presence than the ANC and Democratic Alliance

More top stories

Constitutional court confirms warrantless searches in cordoned off areas unconstitutional

The law was challenged in response to raids in inner Johannesburg seemingly targeting illegal immigrants and the highest court has pronounced itself 10 days before an election in which then mayor Herman Mashaba has campaigned on an anti-foreigner ticket

A blunt Mantashe makes no promises during election campaigning

ANC chairperson Gwede Mantashe told people in Daveyton to stop expecting handouts from the government

Mbeki: Social compact the answer to promises made in ANC...

Former president Thabo Mbeki urged business and government and society to work together to tackle issues such as poverty, unemployment and poor services and infrastructure

South Africa needs to make pension system more inclusive, study...

South Africa’s pension system is ranked 31st out of 43 countries, receiving a C-grade which indicates major risks and shortcomings that should be addressed
Advertising

press releases

Loading latest Press Releases…
×