Oil dips a little after Trump outburst, but still rules high


Oil prices have been supported not only by OPEC's widespread production cuts but by rising demand in Asia and US sanctions against Russia, Venezuela and Iran which are all key oil producers. "That's what could put a ceiling on oil prices", said Sayed. Venezuela has actually achieved one of the highest levels of compliance but for idiosyncratic reasons related to deteriorating economic conditions that have left PDVSA, the state oil company, lacking funds to halt a precipitous decline in output or pay foreign partners. If they are, that may contribute to tighter global supplies and push oil prices higher. Also surfacing last week were suggestions that Saudi Arabia would like to see oil prices at $80 or even $100 a barrel (http://www.marketwatch.com/story/watch-for-violent-selloff-to-thwart-saudis-wish-for-100-oil-2018-04-19).

Crude erases gains as Trump accuses group of inflating prices.

"Global oil demand data so far in 2018 has come in line with our optimistic expectations, with Q1 2018 likely to post the strongest year-on-year growth since Q4 2010 at 2.55 million barrels per day", U.S. bank Goldman Sachs said in a note published late on Thursday.

Three industry sources said that Saudi Arabia would be happy to see crude rise to United States dollars 80 (56.38 pounds) or even USD 100 a barrel, a sign Riyadh will seek no changes to the supply-cutting deal even though its original target is within sight.

OPEC and 10 producers outside the cartel have been holding back crude output by 1.8 million barrels a day since the start of previous year, part of a coordinated effort to rein in a supply glut that had weighed on prices since late 2014 and boost prices. According to Citigroup, it could be anywhere from 200,000 bpd to 1 million bpd if the Iran nuclear deal collapses. SocGen's base-case scenario is sanctions implemented in two to three months after May 12, and removing 500,000 bpd of Iranian oil, "much less than in 2012". This could lead to "sanctions within 180 days, but markets have not priced it in".

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Dollar-denominated commodities like oil tend to have an inverse relationship with the USA currency.

"Stay long oil", US bank J.P. Morgan said in a separate note to clients.

The U.S. trade action against Russian Federation and, potentially, against Iran has resulted in a slump in Russia's ruble and Iran's rial.

Geopolitical risks abound as well. Sara Vakshouri, head of consultancy SVB Energy International, told Platts that this move could be an attempt to curb the impact of fresh sanctions by taking the dollar out of transactions, but it is unlikely to completely protect Iran from sanctions.

The weekly production and stocks report from the US Energy Information Administration (EIA) confirmed that with estimated total domestic US crude production up by 15,000 barrels a day last week to 10.54 million barrels a day.