Saudis to cut Aug shipments to lowest level this yr

Dhaka,  Sat,  22 July 2017
Published : 12 Jul 2017, 22:01:12
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Saudis to cut Aug shipments to lowest level this yr

Oil rises above $48 as API reports drop in US fuel stocks
DUBAI, July 12 (Reuters): Saudi Arabia will cut crude oil shipments to its customers in August by more than 600,000 barrels per day to balance the rise in domestic consumption during the summer, while staying within its OPEC production commitment, a Saudi industry source said.

"There is strong demand for our crude but we are sticking to our OPEC commitments," the source, who is familiar with the kingdom's oil policy, said on Wednesday.

"In order to meet its OPEC quota and meet its domestic demand during summer, Saudi Arabia has made big cuts in allocations internationally by more than 600,000 bpd for the month of August," the source said.

Crude exports for August will fall to their lowest level this year at around 6.6 million bpd, the source added.

Crude allocations to Asia for August will be reduced by about 200,000 bpd to 3.5 million bpd, while allocations to Europe will be down by around 70,000 bpd at 520,000 bpd.

Oil majors were allocated some 200,000 bpd less in August at 780,000 bpd.

Exports to the United States will be below 800,000 bpd in August, the source said.

Saudi Arabia told the Organisation of the Petroleum Exporting Countries its oil production in June rose to 10.07 million bpd, slightly above its OPEC target, mainly due to an increase in domestic crude burning for power during summer.

The source also cited late May port closures as pushing some cargoes into June, which may have resulted in higher June exports. The source said July oil output would be lower than June, without providing details.

"Saudi Arabia is keen to see an improvement in the oil market and accelerate the balancing process, and expects other producers to do the same," the Saudi source said, adding that there are signs of improvement in market fundamentals.

Another report from London adds: Oil rose above $48 a barrel on Wednesday in response to a fall in US fuel inventories and a cut in the US government's forecast for crude output and despite OPEC suggesting the oil market will see a surplus next year.

US crude inventories fell by 8.1 million barrels, industry group the American Petroleum Institute said on Tuesday, much more than the forecast.

Official inventory data from the Energy Information Administration is due at 1430 GMT.

Brent crude LCOc1, the global benchmark, was up 62 cents, at $48.14 a barrel by 1130 GMT. US crude CLc1 gained 67 cents to $45.71.

"While further upside could be expected in the short term amid the speculations of a cut in US production, gains may be limited by the firm oversupply dynamics of the markets," FXTM analyst Lukman Otunuga said.

The US crude stocks drop will raise hopes that a long-awaited market rebalancing is under way. A supply glut has stuck around for three years, despite an OPEC-led output cut in 2017, keeping oil at less than half its price of mid-2014.

Also supporting prices, the EIA said on Tuesday it expected US crude oil production to rise by less than previously forecast next year due to a lower price outlook.

The lower 2018 forecast of 9.9 million barrels per day will ease concerns that the OPEC-led supply cut will lead to a flood of competing US shale supplies, swamping the OPEC effort.
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