Oil prices mixed after inventory-fueled spike

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Oil prices mixed after inventory-fueled spike

U.S. West Texas Intermediate (WTI) crude futures increased by 26 cents, or 0.4 percent, to $67.92 a barrel.

Initially, the OPEC+ members agreed on a combined cut of 1.8 million bpd but lower production by a number of countries in fact made the cuts deeper, raising fears of global oil shortages and a potential spike in the oil prices as a result.

In Vienna in June, OPEC and other producers led by Russian Federation agreed to ease global output cuts, adding around 1 million barrels per day (bpd) to the market from July 1. Brent crude, the global benchmark, shed 2.2 per cent to $72.

Saudi Arabia, Russia, Kuwait and the United Arab Emirates have increased production, as agreed at a meeting in June, to help to compensate for an anticipated shortfall in Iranian crude supplies once USA sanctions come into force later this year.

Higher crude output from the Saudis, along with Nigeria and Iraq, pushed up total production from the Organization of Petroleum Exporting Countries by 300,000 barrels a day, offsetting losses from a spiraling economic collapse in Venezuela, political clashes in Libya and the onset of US sanctions against Iran.

Crude futures pulled back on Friday, giving up gains from the previous session as trade concerns weighed on the market and fueled concerns about demand.

At the Multi Commodity Exchange, crude palm oil for delivery in the current month was trading down by Rs 1.80, or 0.30 per cent lower at Rs 595.50 per 10 kg in a business turnover of 334 lots.

A survey showed that the Organisation of Petroleum Exporting Countries (OPEC's) crude output increased last month as Saudi Arabia pumped near-record volumes to make good on a pledge to consumers that demand would be met.

The cartel and its allies - known as OPEC+ - decided in June to increase production in response to consumers' concerns over rising prices and supply disruptions, so traders and investors have been watching Russia's oil data closely. Analysts polled by Reuters had expected a decline of 2.8 million barrels.

Low U.S. stockpiles were still providing a floor for prices, with overall U.S. crude inventories below the five-year average of around 420 million barrels.

Also, crude stocks at the Cushing, Oklahoma, delivery hub for WTI futures were down, dropping by 1.3 million barrels, EIA data showed.

Meanwhile, a USA decision to scale back fuel standards would lead to higher demand, though that could be balanced by trade tensions between the United States and China. Additionally, he said, US monthly figures for production fell in May, suggesting that output may be curbed later in the year, he said.

Moreover, a broadly firmer US dollar and intensifying US-China trade dispute also weighs negatively on the higher-yielding oil.

Fears that Chinese demand could taper fueled the pullback on Friday after state oil major Sinopec cut its purchases of USA crude. West Texas Intermediate, the US benchmark crude, has been trading in a relatively healthy backwardation - the opposite structure to contango - suggesting a tight market.

After Trump called for a 15 percent increase in tariffs on Chinese goods earlier this week, Beijing on Friday announced it was targeting $60 billion worth of USA goods in response.

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