Oil slides as USA climate withdrawal compounds glut concerns

Russian Economic Development Minister Maxim Oreshkin

Oil prices moved higher following the EIA inventories data on Thursday, but there was selling pressure above $49.00 p/b and prices retreated again late in the U.S. session. This may be cause for optimism that at least part of the inventory will become gasoline and be used up during the summer, but past year, the driving season failed to take care of excess crude oil inventories and considerably contributed to a general feeling of gloominess among oil traders.

US West Texas Intermediate futures were at $47.90 a barrel, up 24 cents, or 0.5 per cent.

Brent for August settlement dropped as much as 90 cents, or 1.8 percent, to $49.73 a barrel on the London-based ICE Futures Europe exchange.

Libya and Nigeria are the two OPEC nations exempted from the production cut deal.

Crude closed down more than 1 percent on Friday for a second straight week of losses, on worries that U.S. President Donald Trump's withdrawal from the Paris climate accord could accelerate U.S. production and flood the global oil market. Rystad Energy believes this implies another upward revision of the EIA's official oil production outlook for the U.S., which is now at 9.74 million barrels for December 2017.

But U.S. production is not growing as fast as the government earlier predicted.

"I think it's still going to be a bit of a debate on the true impact it can have on the oil market", said Olivier Jakob, strategist at Petromatrix.

Scott Pelley Is Reportedly Out as Anchor of CBS Evening News
Mason has been a top fill-in for Pelley on the program, and could wind up as Pelley's replacement, THR notes. Tuesday night, the magazine, Page 6 reports Pelley is being moved to a role exclusively with '60 Minutes'.

The U.S. rig count rose by 11 to 733, extending a year-long drilling recovery to the highest level since April 2015.

Hedge funds trimmed bets on rising crude prices to the lowest level since November as oil futures dipped below $50 a barrel amid skepticism an OPEC-led campaign to cut output will soon curb a worldwide supply glut.

While weaker oil price broke another myth or fundamental understanding that a nine-month agreement between the OPEC and N-OPEC countries would immediately boost oil price, it has broken many such myths over the past years and understanding them or at least recognizing them is of utmost importance if one looks to forecast the future price.

Similarly, on Friday, demand for bearish puts expiring in March 2018 spiked, indicating traders and investors are already protecting against a more aggressive drop in price once OPEC's joint supply deal expires.

Rosneft, Russia's largest oil producer, has borne the brunt of output cuts under the extension deal.

Reuters sources say OPEC officials discussed deepening the cuts last week and could revisit the proposal.

As a nervous and impatient market is forced to pick the victor between the 1.8 million b/d of OPEC/non-OPEC cuts in force until March 2018 and the rise in U.S. production underway, even before the full impact of either has been felt, trade has become increasingly sentiment-driven, with the view swinging to the bearish end in recent weeks.

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