Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Oil prices fall on rising U.S. and Russian supplies

Published 06/11/2018, 10:18 AM
Updated 06/11/2018, 10:18 AM
© Reuters. An oil well pump jack is seen at an oil field supply yard near Denver

© Reuters. An oil well pump jack is seen at an oil field supply yard near Denver

By Christopher Johnson

LONDON (Reuters) - Oil prices fell on Monday, pulled down by rising Russian production and the highest U.S. drilling activity in more than three years.

Analysts expect higher U.S. output to offset supply curbs by the Organization of the Petroleum Exporting Countries (OPEC), which have been in place for 18 months and have pushed up prices significantly over the past year.

Benchmark Brent crude (LCOc1) was down 65 cents at $75.81 a barrel by 1330 GMT. U.S. light crude (CLc1) fell 60 cents to $65.14.

The number of new rigs drilling for oil in the United States rose by one last week to 862, its highest since March 2015, data from energy services company Baker Hughes showed. [RIG/U]

That suggests U.S. crude output, already at a record 10.8 million barrels per day (bpd), will climb further.

Russian news agency Interfax said on Saturday that Russia's oil output had risen to 11.1 million bpd in early June, up from slightly less than 11 million bpd for most of May and above its target output of under 11 million bpd.

But markets are worried by falling supply from Venezuela and the potential of lower exports from Iran.

Venezuelan production is falling because of sanctions, economic crisis and mismanagement, while Iran faces U.S. sanctions over its nuclear program that are likely to curb exports in the next few months.

"Sentiment is caught in a tug of war between the drop in supply from Iran and Venezuela and the prospect of rising output from OPEC/non-OPEC coupled with rampant U.S. shale production," said Stephen Brennock, analyst at brokerage PVM Oil Associates.

OPEC, together with some non-OPEC producers including Russia, started withholding output in 2017 to try to end a global supply glut and support prices.

"Non-OPEC supply is expected to rise sharply in 2019, led by U.S. shale growth, along with Russia, Brazil, Canada and Kazakhstan," U.S. bank JPMorgan (NYSE:JPM) said.

"Oil fundamentals are expected to weaken in 2019 on the back of stronger than expected non-OPEC supply, but also the potential release of barrels from OPEC as the joint accord between OPEC and non-OPEC is unlikely to stay in place," JPMorgan said in its quarterly outlook.

OPEC and its partners are due to meet June 22-23 in Vienna.

Iraq's oil minister said on Monday that producers should not be influenced by pressure to pump more oil.

Jabar al-Luaibi said that oil prices still require support and stability, and producers "should not over-exaggerate" the oil market's need for more supplies.

© Reuters. An oil well pump jack is seen at an oil field supply yard near Denver

"This could be misinterpreted by speculators and consumers, leading to a significant fall in oil prices," he said.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.