As the spat between the UAE and Saudi Arabia
continues to dominate the news in the global oil sector, the feared supply
crunch receded somewhat with some encouraging news from the EIA, the US Energy
and Information Administration.
In its annual report, the EIA revised up its own
weekly forecast of the US crude oil production, for the week ending 25, June:
it was up by 186,000 bpd.
With that, as of the mentioned date, the US crude
oil production stood at 16.3 million bpd.
Although the US crude oil inventories have been on
decline for 6 straight weeks, an increase in production by such an amount was not
something that analysts anticipated. In this context, the fall is in oil price
on Wednesday is understandable.
When the planned ministerial meeting of the OPEC+
did not go ahead on Monday, with no agreement on the production hike for the
period from August to December, on Friday, the crude oil price went up in
response to the apparent fall in supply.
In addition, the talks on reviving the JCPOA, 2015
Iranian nuclear deal, have completely lost the momentum, after six round of
discussions in Vienna, Austria. The two sides of the divide are as far apart as
before talks started, accusing one another of unfair demands.
The international moves to pacify the two Middle
Eastern neighbours, which are currently at the loggerheads over the baseline of
production, meanwhile, gather pace.
Both the US and Russia are taking steps to help them
get round the impasse, which could potentially have implications beyond the oil
price.
In another development, Dharmendra Pradhan, the
Indian Energy and Oil minister, was removed from his post by Prime Minister in
a major reshuffle on Wednesday.
Mr Pradhan fought hard to bring the price of crude
oil, sometimes got into heated arguments with his Saudi counterpart, but to no
avail. As the price of oil at the pumps
started rising rapidly, it developed into a major political issue for the
Indian government.
In this context, the markets must be watching the
next report on the US crude oil inventories to gauge the direction that the
sector is heading in the short run.
