Record US oil production drags crude oil prices

Futures in New York dropped as much as 1.3% after the American Petroleum Institute was said to report nationwide crude inventories rose last week

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Kazakhstan's oil output in the first five months of 2018 rose 6.4 percent from the same time a year ago to 37.7 million metric tons (1.83 million bpd), Deputy Energy Minister Makhambet Dosmukhambetov said on Tuesday. Most of that non-OPEC supply growth would come from the USA, it said.

Crude oil prices were mixed in European trading Thursday morning as the market searched for signals on how OPEC will resolve rising divisions over the future of the production cut agreement, and digested a surprise drop in USA crude stocks.

The idea of forming an oil bloc to counter OPEC's hegemony was mooted by Indian Petroleum Minister Dharmendra Pradhan during the International Energy Forum meeting in April in New Delhi.

OPEC and its Russia-led non-OPEC allies are up for a very heated meeting next week, but it looks like the leaders of the two groups-Saudi Arabia and Russia-believe that they will persuade dissenters to agree to some sort of a production boost. While Opec countries are still the dominant suppliers to Asia, nearly all big importers in the region have increasingly turned to U.S. crude after a four-decade ban on American exports was lifted in late 2015.

In contrast, Saudi Arabia and several other OPEC members, including the United Arab Emirates and Kuwait, and non-OPEC nation Oman would prefer a gradual production boost to avoid upsetting the oil market.

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Meanwhile, the market was also weighing a surprise drop in U.S. crude stocks figures, which is typically bullish for the market.

Saudi Arabia is mulling different scenarios to raise production over the coming months by between 500,000 barrels a day and 1 million barrels a day. Members of the cartel, led by Saudi Arabia, and other big producers including Russian Federation have played a role in reversing the plunge in crude prices that started in 2014.

Prices peaked in late May, scraping the $80 per barrel ceiling on the Brent futures contract and $72.24 on the West Texas Intermediate.

"Oil prices are too high, OPEC is at it again".

Oil ministry officials also said that with firm oil prices, a rising import bill, $450 billion of external debt, including oil-related debt, govternment's hands are tied and there is no scope for fuel price reduction.

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"Those in the know might get a hint as early as today - the topic will surely come up between President Putin and the Saudi crown prince as they watch their countries' teams in today's opening game of the football World Cup together", said Tamas Varga, an analyst at PVM Oil Associates London.

"OPEC has the lowest spare capacity ever right now", said fund manager Pierre Andurand, in a tweeted response to Trump.

OPEC ministers meet June 22 for a regular meeting to consider what happens next with their effort to stabilize the market.

Prices, however, were already rising on growing demand and expectations that a sharp pullback in new investment by oil companies would reduce the oil supply.

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