US oil prices rose slightly while Brent slipped just under 1 per cent in trading on Thursday as a rising US dollar and weakening euro pressured crude prices on Tuesday. BP photo.
Brent oil prices as analysts expect OPEC to increase production
Oil prices were mixed in trading on Tuesday. US West Texas Intermediate was up by pennies and benchmark Brent fell by almost 1 per cent as analysts and investors weighed a possible increase in OPEC production against falling Venezuelan and Iranian crude exports.
By 4:21 p.m., EDT, Brent crude futures were down 66 cents to $75.80/barrel and US WTI crude futures were up 12 cents to $66.22. The Canadian Crude Index rose by 1 penny to $42.94.
“I was looking for an up day (for WTI) – in just a few weeks it had fallen from around $73 (a barrel) to $65, … and even for the window of seasonal decline, that’s a big move to go uncorrected,” Walter Zimmerman, chief technical analyst at ICAP-TA told Reuters.
Phillip Streible, senior market strategist at RJO Futures told Reuters that the rising US dollar and a weaker euro put some pressure on Brent prices. The stronger greenback makes US-dollar denominated crude more expensive for customers using other currencies.
On Tuesday, OPEC released its monthly report which said there was a high degree of uncertainty hanging over the global crude market.
Since the beginning of 2017, OPEC and some other oil producing including Russia, have cut their production by a total of 1.8 million barrels per day (b/d) to help rebalance the oil market.
The OPEC supply cut pact has been a major factor in the increase in oil prices. In recent months, pact kingpins Saudi Arabia and Russia hinted that supply cuts will be eased to ensure the crude market will not be short on supply.
On June 22-23, OPEC and the supply cut agreement participants will meet in Vienna to discuss the agreement.
The cartel will consider the crisis in the Venezuelan oil industry that has seen production decline significantly in recent years. Saudi Arabia and Russia have said they will boost their output to compensate for the decline in Venezuelan exports.
Iran’s crude exports are also expected to decline as US sanctions against Tehran take hold after the Trump administration exited the Iran sanction relief program last month.
Despite these possible supply shortages, Iraq’s oil minister said on Monday that OPEC producers will not be influenced by pressure to pump more crude.
But, most analysts say they expect OPEC to opt to increase its overall production and OPEC contends that the outlook for the second half of this year is highly uncertain, despite data from the cartel showing the global crude glut has been eradicated.
“I feel that if they would like to be a responsible swing producer for the global oil market, based on their (demand) numbers, they should increase production by at least 1 million bpd from the current level,” PVM Oil Associates strategist Tamas Varga told Reuters.
In its monthly short-term energy outlook, the US Energy Information Administration forecasts US production will rise by less than previously expected to 11.76 million barrels per day (b/d).
The agency also reported that US oil consumption growth will increase by 530,000 b/d to 20.41 million b/d. In earlier forecasts, the EIA had predicted US crude consumption would increase by 500,000 b/d to 20.38 million b/d.