Oil inches up on Saudi production drop, dollar touches 14-month peak

Oil futures titled higher in American trade after OPEC reported a drop in Saudi Arabia's production, while the dollar index continued its march higher to June 27, 2017 highs following earlier US data. 

As of 04:55 GMT, US crude futures due in September rose 0.16% to $67.31 a barrel, while Brent futures due in October inched up 0.12% to $72.70 a barrel, as the dollar index added 0.32% to 96.69, marking over 13-month highs. 

Earlier data from China showed the unemployment rate rose to 5.1% in July from 4.%, while retail sales rose 8.8% y/y, slowing down from 9.0%, and missing estimates of 9.2%. 

Industrial production rose 6.0% y/y with no change, missing estimates of 6.3%. 

The National Bureau of Statistics of China said the country's economic growth is still in the moderate range, expecting increased infrastructure investments in the second half of the year, while calling for a deeper assessment of the impact of the US-China trade dispute on the local economy. 

The Bureau reported a 2.6% drop in China's oil production last month to 15.85 million tonnes, while falling 2.1% in the first seven months of the year to a total of 109.95 million tonnes, while consumption rose 11.6% to 50.75 million tonnes in June, while rising 9.2% year-to-date to 350.57 million tonnes. 

US Data

Otherwise, earlier US data showed import prices unchanged in July, compared to a 0.1% m/m dip in June, and missing estimates of a 0.1% increase, while prices excluding petroleum slipped 0.1%, compared to a 0.4% decline in June. 

On a yearly basis, prices rose 4.8% last month, up from 4.7% in June, and beating estimates of 4.5%. 

On another note, the Congressional Budget Office warned from slowed growth in 2019 and subsequent years as the impact of financial stimulus diminishes, with the office forecasting a 3.1% growth rate in 2018, up from 2.2% in 2017 as tax cuts and government spending prop up the economy. 

The office expects a 2.4% growth rate in 2019 as business investments and government spending recedes, while forecasting an average rate of 1.7% for the period ranging from 2023 to 2028. 

OPEC's Monthly Report  

In its monthly report, OPEC expected demand on its oil to decline next year as rival producers pump more crude into the market, forecasting demand of 32.05 million bpd on OPEC next year, down 130 thousand bpd from previous forecasts. 

The oil cartel also reported that production in July rose to 32.32 million bpd, or above demand forecasts, with the organization expecting supplies from members to increase by 2.13 million bpd, with total oil demand in 2019 amounting to 100.26 million bpd. 

Finally, OPEC expects oil supplies outside the organization to reach 61.75 million bpd next year. 

Otherwise, the US Energy Information Administration cut forecasts for global oil demand growth by 60 thousand bpd in 2018, and by 140 thousand bpd in 2019 to 1.66 million and 1.57 million bpd respectively, while expecting US output to rise by 1.31 million bpd this year, down from 1.44 million in previous forecasts.  

IEA Releases Monthly Report 

The International Energy Agency recently released its monthly report, at which it noted receding worries over supply shortages as producers raise output around the world, while oil demand is expected to rise by 110 thousand bpd in 2019.  

The EIA expects oil supplies outside OPEC to rise by 100 thousand bpd in 2018 and 2019, noting nonetheless that maintaining current levels of oil supplies will be quire difficult in the future as US embargoes Iranian exports in November, while other producers face issues as well.

The US has reimposed blanket sanctions on Iran last week week, targeting its access to dollars, gold, and precious metals amid a push by the American administration to isolate Iran. 

Société Générale expects the US sanctions in November to cut Iranian exports by about one million bpd. 

US Oil Rig Count 

Banker Hughes, a US oil services company, reported an increase of 10 in the rig count to a total of 869 rigs, the first increase in three weeks.

US output is down to 10.80 million bod, still above Saudi Arabia's 10.29 million bpd levels, while below Russia's 11.21 million bpd.