Oil pauses advance as Saudis plan record July output

By Jessica Summers on 6/26/2018

NEW YORK (Bloomberg) -- Crude oil’s advance slowed as Saudi Arabia was said to plan record crude oil production in July.

Futures were little changed in London and up 0.6% in New York after climbing as much as 1.2% on Tuesday. Saudi Arabia is planning to pump a record amount of crude in July to push down oil prices, according to people briefed on the country’s output policy. That follows OPEC’s announcement on Friday the group would raise supply levels.

“This was one of the great unknowns coming out of the recent meeting,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis. “The Saudis really want good relations with the Trump administration.”

State oil company Saudi Aramco is aiming to boost production next month to about 10.8 MMbpd, the people said, asking not be named discussing confidential information. That would surpass the previous high of 10.72 MMbpd in November 2016.

Crude rose earlier amid uncertainty about Libyan oil supplies after a militia leader handed over control of some of the country’s biggest crude-exporting terminals to a rival of the internationally recognized National Oil Corp. based in the capital Tripoli. Traders also focused on a potential decline in stockpiles across the U.S. and at the Cushing, Oklahoma, storage hub.

In Libya, some of the ports are going to be “administered by the wrong person at this point,” said Bob Yawger, director of futures at Mizuho Securities USA Inc. in New York. "That could be a problem. It looks like those barrels won’t have the blessing of the U.N."

West Texas Intermediate crude for August delivery added 42 cents to $68.50/bbl at 10:59 a.m. on the New York Mercantile Exchange.

Brent futures for August settlement slipped 3 cents to $74.70/bbl on the London-based ICE Futures Europe exchange. Brent traded at a $6.10 premium to West Texas Intermediate.

Meanwhile, U.S., crude stockpiles probably fell 2.75 MMbbl last week, according to a Bloomberg survey ahead of the release of Energy Information Administration data on Wednesday. Inventories at the biggest U.S. storage complex in Cushing, Oklahoma, decreased 1.3 MMbbl last week, according to a forecast compiled by Bloomberg.

The industry-funded American Petroleum Institute will release its weekly tally of inventories later on Tuesday.

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