Oil Falls on US Crude Build; Global Supply Rises

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Oil Falls on US Crude Build; Global Supply Rises

"Prices are likely to seesaw without any clear direction as uncertainties rise in the market".

"Oil prices were bearish when we received the stats, prices fell by about $1/b immediately but then took about 3-4 hours to recover and today we are trading higher", said Kjus Torbjorn, chief oil analyst at DNB Markets.

The United States government has unofficially asked Saudi Arabia and some other OPEC producers to increase output, sources said on Tuesday.

Benchmark Brent oil futures dropped as much as 2 percent to $73.81 a barrel in London trading after the US request was reported, according to Bloomberg, but later recovered to $75.34.

Thanks to the Saudi brokered Opec and Russian (Ropec?) oil deal in 2016, the global glut is gone and the crude oil market has balanced. US oil production is up 1.5 million bpd from a year earlier.

WTI settles at $64.73/bbl, down 79 cents, or 1.21%, on the day.

Brent crude futures LCOc1 were up 33 cents, or 0.4 percent, to $75.69 a barrel at 0101 GMT, Reuters said. The $66 level above and of course the uptrend line that we had previously been paying so much attention to should be resistive, so I do think that we go lower over the next several sessions.

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The Organization of the Petroleum Exporting Countries and other producers including Russian Federation have cut output since 2017 to reduce a global crude glut.

OPEC meets in Vienna on June 22 to decide whether the group and non-OPEC producers, including Russian Federation, should raise output to make up for any supply shortfall from Iran and Venezuela.

OPEC will meet on June 22 and needs a consensus of all members to officially change its output policy. Its output has been hampered by inadequate investment, mismanagement and US sanctions. State firm PDVSA is considering declaring force majeure on some exports, three sources told Reuters, amid plummeting output from its oil fields and tanker bottlenecks at ports.

While the US government has often expressed opinion against OPEC's oil price-fixing policies-including a recent comment by President Donald Trump, asking for a specific amount of oil production boost is a rare move, Bloomberg's sources noted.

Iran would benefit less than Saudi Arabia from an increase in supplies if it can not raise output, as well as receive a lower price for existing production.

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