June 2nd Oil Producers Meeting Looming Closer

US crude oil inventory were lower than expected but did not see a big response in prices after the API weekly supply report showed a significant decline also. Traders had expected a dip as we move into summer drive season and the massive Alberta wildfire continues to hamper North American production. WTI is up 31 cents at 49.84 and seems to be well supported at the $49 resistance level. Brent oil is up over 32 cents at 50.06 with the spread narrowing once again. There remains a deep imbalance to the marketplace.  Data released late Tuesday by the American Petroleum Institute show the amount of crude oil in storage in the United States dropped by 5.1 million barrels last week. That’s more than 60 percent above a prediction earlier in the week from S&P Global Platts.

U.S. inventory levels may be influenced by outages in Canada, the top crude oil exporter to the United States. As much as 1 million barrels per day were sidelined by wildfires in the Fort McMurray area of Alberta, though the provincial government this week gave the all-clear for workers to return to oil sands installations as the fire threat moves east toward Saskatchewan.

Traders are now focusing on the June 2^nd production meeting which failed in April to reach an understanding. The Organization of the Petroleum Exporting Countries is focusing on market share rather than on supporting oil prices, Iraq’s OPEC governor said on Tuesday in comments that will dampen expectations that OPEC might agree steps to support prices at a meeting next week.

“After two years, the market is starting to balance but it nearly destroyed many countries,” Falah Alamri, Iraq’s OPEC governor and head of the State Oil Marketing Organization (SOMO), said at an Iraq oil conference in London. The “two years” is a reference to OPEC’s meeting in November 2014, when the producers group refused to cut output to support prices.

Global energy producers and countries depending on oil production are beginning to collapse under the strain of low oil prices. Nearly 500 jobs will go from Shell’s UK and Ireland workforce as the oil giant revealed a persistently low crude price is forcing it to shed another 2,200 positions worldwide.

Saying that it now expects the oil price to remain ‘lower for longer’, the firm revealed that these extra losses means 12,500 roles – across staff and direct contractors – will have been cut from the start of last year to the end of this.

The company, which sealed a mega-merger with BG Group in February, said the cost-cutting drive will include the loss of about 475 jobs at its UK and Ireland ‘upstream business’.

The global oil supply decreased by nearly four million barrels per day this month after a series of incidents, such as fires in Canada and military attacks in Nigeria, caused temporary outages worldwide. SEB head commodities strategist Bjarne Schieldrop told the news agency: “We are definitely moving out of this surplus situation that we’ve been living in since mid-2014.

“There will still be some time, maybe six months of surplus, but then we’re basically into rebalancing.”

Strikes across France over new labour laws have so far had little impact on crude oil prices, but have helped lift refining margins for diesel and gasoline. The strike has spread to all eight oil refineries in the country.