Saudi Arabia: Oil prices recover in July
July 27, 2017
Expectations that the global crude glut is finally receding has provided somewhat of a boost to oil prices in recent weeks. The OPEC oil basket traded at USD 48.5 per barrel on 26 July, an increase of 12.4% from the same day in June and the highest value in nearly two months. While oil prices have gained 19.4% over the same day in 2016, they are down 9.0% since the start of the year. Despite the increase, crude prices remain firmly entrenched below the USD 50 per barrel mark.
U.S. crude stocks fell by 7.2 million barrels in the week ending on 21 July, well above the 2.6 million barrels that had been forecast although it did mark the fourth consecutive weekly decline. The bullish sentiment has also been encouraged by news suggesting that global growth is strengthening. Against this backdrop, some market participants believe that the oil market is gradually moving toward balance. Nevertheless, inventories remain above their five-year average and any gain in oil prices will likely encourage shale oil producers to ramp up production.
According to the latest OPEC Monthly Oil Market Report, combined oil output in OPEC countries increased from 32.22 mbpd in May to 32.61 mbpd in June, mainly reflecting stronger production in Angola, Iraq, Libya, Nigeria and Saudi Arabia. In fact, Saudi Arabia produced 9.95 mbpd in June, slightly up from 9.90 in May. Conversely, crude production in Venezuela decreased significantly in the same month.