"Summer Doldrums" Impact Crude Prices, but a Rally to $50 Still Possible

US Crude Oil Inventories Could Fall below the 5 Year Average

Brent futures for September delivery settled up 86 cents, or 1.8 per cent, at $49.70, while U.S. West Texas Intermediate crude for August settled up 72 cents, or 1.6 per cent, at $47.12 on its second to last day as the front month.

Now Bloomberg reports that Ecuador has broken ranks with its fellow Opec nations, saying that it can not afford to cut production and will not keep to the commitment. Gasoline inventories fell 1.65 million barrels.

Nigeria and Libya are exempt from the deal between Opec and other producers, including Russian Federation, to cut production by around 1.8 million barrels per day between January this year and March 2018 in order to tighten the market and prop up prices.

According to the American Petroleum Institute, U.S. crude supplies grew by 1.6 million barrels in the week ended July 14.

Grigory Vygon, head of the consultancy, said exports are likely to recover next year following the expiry of a global deal aimed at bolstering oil prices by curbing production.

Marzouq said it was too early to talk about recommendations to adjust the deal, or to cap production from Nigeria or Libya.

The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Wednesday morning, showing that U.S. commercial crude inventories decreased by 4.7 million barrels last week, maintaining a total U.S. commercial crude inventory of 490.6 million barrels. But the report also showed (http://ir.eia.gov/wpsr/overview.pdf) a rise of 32,000 barrels per day in total domestic crude output to 9.429 million barrels a day.

"We need funds for the fiscal treasury and for that reason we've taken the decision to gradually increase production, although not to the country's full potential, because of OPEC's output restrictions and the ceiling that we have as a result", Perez said in a televised interview.

Crude oil futures were lower Monday amid delayed reaction to data showing the U.S. oil rig count rose again last week.

That is because supplies from within Opec remain high largely due to rising output from Nigeria and Libya, two Opec states exempt from the pact, and increasing U.S. production.

While I am not going to try and predict where oil prices are headed, I can make a strong case for a tradable price range going forward, based on the data.

In an effort to eradicate a supply glut, the OPEC is curbing output by 1.2 million barrels per day (bpd) until March 2018, while Russian Federation and other non-OPEC producers are cutting half as much.

The refiner last week bought the country's first crude cargo from the United States and increased imports of Russian Urals crude this year.

The price of oil fell dramatically three years ago and has stayed low since, thanks to a massive global oversupply.

Still, oil stocks remained comfortably above the five-year average and prices were more than 15% below their 2017 highs.

In parallel, refineries operated at 94.0% of capacity. Prices gained US$2.31 to US$46.54 a barrel last week.

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