Oil prices extend losses after JP Morgan cuts forecast

While oil is still in technical price trouble in the short-term the correction should soon be over.

Oil pumpjacks are seen in Lagunillas, Venezuela May 24, 2018.

US crude inventories rose 2.1 million barrels in the week to June 1, the Energy Information Administration said, a surprise after analysts had forecast a decrease of 1.8 million barrels.

Crude prices got an early lift on concerns about exports from Venezuela. West Texas Intermediate (WTI) crude futures were down 38 cents, or 0.6 percent, at $65.57 a barrel.

JP Morgan cut its 2018 crude forecast for WTI by $3 to $62.20 a barrel, traders said.

USA crude oil production hit another record last week at 10.8 million barrels per day (bpd).

Venezuela's Oil Ministry didn't immediately respond to requests for comment. That compared with 9.6 million bpd in April.

USA drillers added one oil rig in the week to June 8, bringing the total count to 862, the highest level since March 2015, General Electric Co's Baker Hughes energy services firm said in its closely followed report on Friday.

One of the key features of oil markets recently has been the widening discount of US WTI crude versus Brent CL-LCO1=R , which has nearly quadrupled since February to $11.40 per barrel, its steepest discount since 2015.

US crude output hit a record of 10.8 million barrels a day in the week, according to the EIA's weekly report.

Despite Friday's decline, Brent remains more than 15 percent above its level at the start of the year. Tankers waiting to load more than 24 million barrels of crude, nearly as much as PDVSA shipped in April, are sitting off the main oil port, according to shipping data.

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

The group and Russian Federation are due to meet at its headquarters in Vienna on June 22 to discuss production policy."The June 22 OPEC meeting will now likely become the most important factor influencing (the) crude price", Jefferies said.

The Organization of the Petroleum Exporting Countries meets to review its oil output policy on June 22 in Vienna.OPEC, founded in 1960, has a history of collaboration over oil policy despite differences of opinion and even wars between some members over the years.

Headlines on OPEC members' plans for the meeting later this month will lead to volatile market swings, said Tariq Zahir, managing member of Tyche Capital Advisors in NY.

(Copyright © 2015. All Rights Reserved.)
 
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