Oil Prices Are Too High

That move took crude from about $50 a barrel in late 2016 to more than $70 this year.

A man fixes a sign with OPEC's logo next to its headquarters' entrance before a meeting of OPEC oil ministers in Vienna, Austria, November 29, 2017.

- Donald J. Trump (@realDonaldTrump) April 20, 2018Bloomberg and Reuters reported last week that Trump requested that Organization of Petroleum Exporting Countries members, such as Saudi Arabia, increase their oil production.

OPEC and Russian Federation decided together in 2016 to cut their supply in order to push prices up following a crash in prices induced by a global crude production glut. The cartel is meeting next week, where it will consider pulling back from the deal.

"Prices are unlikely to increase as sharply as they did from mid-2017 onwards and thus the dampening effect on demand will be reduced", the IEA said in its latest monthly report.

Oil prices edged higher on Wednesday, turning positive after US government data showed a bigger weekly draw than expected in domestic crude inventories along with unexpected declines in gasoline and distillate stocks.

After peaking in May at $80.50 a barrel, prices have pulled back, with the price of Brent crude trading on Wednesday near $76 at barrel, partly in anticipation that the deal may end, and as Saudi Arabia and Russian Federation have already started increasing production. They plan to discuss oil, amongst other things.

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USA crude stocks fell more than expected last week, while gasoline and distillate inventories dropped, the Energy Information Administration said on Wednesday.

Even if the supply gap, triggered by the return of U.S. sanctions on Iran and a major political crisis in Venezuela, is plugged, the oil market will likely remain vulnerable to disruption next year, the IEA warned.

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.

"To make up for the losses, we estimate that Middle East OPEC countries could increase production in fairly short order by about 1.1 mb/d and there could be more output from Russian Federation on top of the increase already built into our 2019 non-OPEC supply numbers", it added.

In the United States, rising gasoline prices have threatened to blunt other economic headwinds.

Oil prices across the country have crept up toward $3 a gallon as the USA hits its peak summer travel season - still less than the $4 a gallon in 2008 during the 2007-2009 Great Recession, according to Reuters. Trump tweeted in April.

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