Oil Prices Are Too High

Pumped further by global trade war fears, oil prices have since surged to multi-year highs, only to then fall back again somewhat, the IEA said.

However, OPEC's president, Suhail Al Mazrouei, said on Tuesday that the USA has not asked the group to increase oil production in the wake of political unrest in oil-rich Venezuela and US sanctions on Iran.

USA ally Saudi Arabia remains OPEC's most powerful member - with enough production capacity to manipulate global supplies.

Since early 2017, OPEC and other oil-producing countries have agreed to reduce supply in a bid to bolster oil prices.

Brent futures for August settlement declined as much as 62 cents to $75.26 on the London-based ICE Futures Europe exchange, after sliding 0.8 percent on Tuesday.

Although Saudi Arabia has benefited from oil's rally over the last two years, the government relies on a strong security relationship with the US, giving Washington some influence in the debate over OPEC policy.

In the United States, the American Petroleum Institute said on Tuesday crude oil inventories rose by 830,000 barrels in the week to June 8, to 433.7 million. The Kingdom self-reported a production increase of 161,400 bpd to 10.030 million bpd, just below its ceiling of 10.058 million bpd.

The full organization, plus non-members like Russian Federation who agreed to take part in the earlier round of production cuts, are meeting June 22 and 23 in Vienna.

Saudi Arabia, the biggest producer, raised its production by 85,500 bpd to 9.987 million bpd, according to OPEC's secondary sources.

Total OECD commercial oil stocks-OPEC's current gauge of the oil market rebalancing-were 26 million barrels below the latest five-year average, as per preliminary data for April.

Longer term, the market could tighten as demand increases if OPEC fails to cover supply shortfalls, the International Energy Agency said on Wednesday. American oil production has jumped by nearly a third in the last two years to a record 10.8 million barrels per day.

The change in Saudi tone came after major oil consuming nations, including the U.S., India and China, complained about rising fuel prices.

Fund manager Pierre Andurand at Andurand Capital is bullish.

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