Crude oil futures higher on expected stock draw, OPEC report

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Year to date, OPEC's reference basket is up $19.38 per barrel compared to the same period in 2017.

However, the cutbacks, which were reported by OPEC in its latest monthly report, were accompanied by a disclosure from the cartel that the Saudis were merely determined to avoid a return of oversupply - and that oil output in July rose to 32.32 million barrels per day (bpd), higher than the 2019 demand forecast by 41,000 bpd.

The organization reviewed its 2018 forecast and increased production by 1.64 million barrels per day (Mmbdp), to reach an average of 98.83 Mmbpd.

June's OPEC meeting ended with a commitment for just under 1 million b/d of increased output, supported by Saudi Arabia and Russian Federation.

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OPEC expects that average oil production in Russian Federation will be 11.15mn barrels per day in 2018 and 11.17mn barrels daily in 2019.

Saudi Arabia cutting its oil production in July and the prospect of continued strength in the USA dollar may not seem to have anything in common; but both are yet more indicators that crude prices will likely continue to drop in the foreseeable future, according to the experts.

"This week, we saw the IEA [International Energy Agency] maintain its projections for global oil demand in 2018, while OPEC made a minor downward revision". OPEC expects non-OPEC supply to expand by 2.13 million bpd next year, 30,000 bpd more than forecast last month. Kuwait ramped up its output by 78,500 to 2.8 million bpd last month, Nigeria by 70,500 to 1.67 million bpd, and the UAE by 69,200 to 2.96 million bpd. Crude inventories C-STK-T-EIA increased by 6.8 million barrels, representing the largest weekly rise since March past year.

USA production growth in 2018 is now expected to rise by 1.69 million barrels a day, down by 10,000 from last month's forecast.

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Brent crude futures LCOc1 were down $1.96 a barrel at $70.50 a barrel by 11:07 a.m. EDT [1507 GMT].

Crude prices were lower Monday morning, with West Texas Intermediate for September delivery trading down about 0.4% at $67.33.

Iran's oil exports peaked at nearly 3 million bpd in May this year, but they have since fallen to around 2 million bpd as Asian buyers, including Japan, South Korea and India, began to shun its crude ahead of the sanctions.

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