Energy ETFs Plunge as OPEC Looks to Higher Production

MID-DAY: Oil continues to slump on reports of higher production; North Korea US tensions weight Wall Street

Oil prices have gained almost 20 percent this year, with Brent briefly rising above $80, driven primarily by coordinated supply cuts by the Organization of the Petroleum Exporting Countries and partners including Russian Federation.

Saudi Arabia, Russia and the rest of OPEC "are likely this week to discuss a controlled relaxation of over-compliance with the Opec and non-Opec production-cut target", according to Argus Media. Commercial US crude inventories C-STK-T-EIA rose by 5.8 million barrels last week, despite expectations that production would decrease by as much as 1.6 million barrels, reports the Energy Information Association.

Oil prices rose Tuesday with Brent crude coming within pennies of the $80 threshold as concerns about tight supply fester in the wake of looming sanctions on Iran and impending doom of Venezuela's oil industry. "U.S. Secretary of State Pompeo demanded that Iran halt all uranium enrichment and give nuclear inspectors access to the entire country", ANZ said in a note.

At a time when India is looking at ways to keep rising fuel prices in check, a further increase in the per barrel price of crude oil (the deciding factor of domestic oil prices) may bring more pain for consumers in the future.

The Organization of Petroleum Exporting Countries and its allies are set to review their production policy 22 June in a meeting in Vienna, trying to balance their desire to completely eliminate a glut in crude markets with the prospect of shortages later this year due to collapsing output in Venezuela and forthcoming USA sanctions to Iran. Traders are still awaiting clarity over President Trump's decision to reimpose sanctions on Iran, while the USA also took new measures against Venezuela this week. Data was also published showing a sharp rise in American stockpiles.

Petrol price up by 38 paise in Thiruvananthapuram
Petrol and diesel prices registered new record highs in Delhi and Mumbai today. Central government puts additional tax of Rs10 on every litre of petrol.

Brent crude LCOc1 futures were last down 56 cents at $79.01 a barrel by 1153 GMT, while US crude CLc1 fell 41 cents to $71.79 a barrel.

Brent futures fell 37 cents, or almost 0.5 percent, to $79.20 a barrel by 0636 GMT, after climbing 35 cents on Tuesday. A lack of pipelines in the prolific Permian Basin shale play in Texas is exacerbating the swelling USA surplus as American production tops 10 million barrels a day.

In Canadian dollar terms, the price of WTI is now where it was, on average, during what Porter called the "go-go years for oil prices", between 2007 and 2014.

The United States Oil ETF (NYSEARCA: USO) traded down about 0.9% to $14.43, in a 52-week range of $8.65 to $14.74.

Distillate inventories saw a draw this week of 1.3 million barrels versus a forecast for a decline of 1.335 million barrels.

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