OPEC oil ministers gather to discuss production level

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"We expect for global trade tensions to weigh on prices sporadically as populist sentiments pervade the financial markets", he said.

Following a sharp increase in crude prices from their sub-$30 per barrel lows in 2016, the group on June 22 will meet in Vienna, Austria, to discuss forward policy.

Fears over the escalating US-China trade war continue to depress the United Kingdom stock market, while the pound fell over Brexit concerns and oil slipped further ahead of a key Opec meeting this week. A dip in oil prices over this last week suggest that the market is factoring in a likely rise in production levels. And some Opec members want prices to go higher to help them meet their country's budgets.

Oil prices have advanced in the past four months with North Sea Brent crude rising from $62.79 to $79.80 a barrel by the end of May. The US has added somewhere around 8,00,000 bpd since the start of the year, a staggering sum.

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Last week, Cushing inventories fell by 1.3 million barrels, government data showed on Wednesday.

It estimated OPEC production had risen by 50,000 b/d in May to 31.69 million b/d. With potential 1 million barrels/day addition by OPEC, the market looks to be well supplied until next year.

Meanwhile, Hindustan Petroleum Corporation Limited (HPCL) Chairman Mukesh K. Surana also said fuel prices may be lowered post the upcoming OPEC meeting. "If the two want to act alone, that's a breach of the cooperation agreement", Iran's OPEC representative Hossein Kazempour Ardebili said. The pressure spread to commodity currencies and the Australian dollar slid below 75 U.S. cents. This is by no means a foregone conclusion, but an economic downturn could cut into demand. That modest rise marked a fourth straight weekly climb, likely signalling further gains in United States output levels.

On the positive side, there are various factors that are supporting crude oil prices. "They've tried to cut inventories on a global basis back in line with this five-year average". Venezuela experiences severe production outage, and already lost 350,000 barrels / day this year with the decline accelerating.

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Iran is not alone in its battle against output hikes, with Iraq and Venezuela also objecting.

China accounted for 23% of total US crude exports of 1.67 million b/d in March, according to data from the US Energy Information Administration. U.S. President Donald Trump has continued to criticize OPEC on his Twitter account.

China's aggressive riposte to Trump took some in the industry by surprise. The compliance with agreed cuts has reached 172 per cent and any reduction will translate into drop of 3.1 mb/d. The contract earlier traded at a two-month low of $63.59.

Energy firms were among the biggest losers as oil prices plunged ahead of a key OPEC meeting, where Saudi Arabia and Russian Federation are expected to lift a two-year-old production cap.

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"This renewed commentary by Novak that they're looking for 1.5 million bpd of production is putting downward pressure on prices in a significant manner". If US oil finds it hard to enter China, it would try to find a way to sell in India, the other main consumer.