Oil Prices Are Too High

Russian Federation and Saudi Arabia, the leaders and largest producers of the non-OPEC and OPEC producers in the deal, have started to hint that they could reverse some of the cuts "to ease consumer and market anxiety", and reports have it that the production boost could be as much as 1 million bpd. Crude inventories fell by 4.1 million barrels in the week to June 8, exceeding analysts' expectations for a decrease of 2.7 million barrels.

The Paris-based agency last month cut its forecast for global oil demand growth for this year as oil prices approached $80 a barrel.

USA production rose to 10.9 million barrels a day in the week, but Kilduff said the market appeared able to absorb the increase.

Oil prices reversed losses, US crude settling 0.4% higher at $66.64 a barrel, and Brent crude rising 1.1% to $76.74, amid reports that Russian Federation wants a full-rollback of production cuts it had agreed to make with OPEC in 2016.

Some estimates put the post-crash reduction in investment by major oil companies such as Exxon Mobil, Chevron and BP at more than $1 trillion. BP (BP) dipped 0.2%, and Royal Dutch Shell (RDSA) lost 0.5%.

Donald Trump renewed his Twitter assault on OPEC, pushing the case for lower oil prices a week before the cartel meets to set production policy.

While Venezuela is a member of OPEC, "the disaster in Venezuela, which has created a hole in the market, is not the fault of OPEC", said Daniel Yergin, the vice chairman of research firm IHS Markit and author of several books on the energy industry.

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The IEA said it expects global oil demand to grow 1.4 million bpd this year, and in 2019, and will top 100 million bpd in the fourth quarter of 2018.

USA crude production rose to 10.9 million bpd last week, according to the EIA, but Kilduff said the market appeared able to absorb the increase. The IEA said OPEC countries in the Middle East could quickly boost production by 1.1 million bpd.

Amid today's high prices, Riyadh and Moscow have said they think the time has come to.

OPEC itself spotlighted U.S. output in its own monthly report on Tuesday, citing the growth of non-OPEC supply as one of several question marks hanging over the situation.

Russian Federation plans to propose to the OPEC/NOPEC allies next week that they reverse the group's production to the October 2016 levels-the baseline for the cuts of most pact participants when they had pumped as much oil as they could to blunt the cuts' impact later.

In April, Saudi Energy Minister Khaled al-Faleh said the global market has the capacity to absorb higher oil prices - a remark that drew a swift reaction Trump.

The IEA report comes a day after OPEC warned of "considerable uncertainty as to world oil demand".

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