Oil falls as United States supply grows, OPEC considers higher output

  • Oil falls as United States supply grows, OPEC considers higher output

Oil falls as United States supply grows, OPEC considers higher output

Analysts said speculators built fresh positions after oil prices rebounded in Asia today on expectations that inventories in the USA may decline but increasing production and concerns that OPEC may raise output continue to weigh on sentiment.

President Donald Trump complained about OPEC and high oil prices in April.

"The catalyst for this recent pullback in oil was the mention of revisions to the now capped" production policy by Saudi Arabia and Russian Federation, says Sevens Report co-editor Tyler Richey.

Recently, the USA output rose to 10.47 million barrels per day - one of the highest levels till date. While oil is still in technical price trouble in the short term the correction should soon be over.

Global benchmark Brent was down 10 cents, or 0.1 percent, at $76.69 a barrel by 0652 GMT.

Khalid Al-Falih Minister of Energy, Industry and Mineral Resources of Saudi Arabia attends a news conference after a meeting of the Organization of the Petroleum Exporting Countries, OPEC, at their headquarters in Vienna, Austria, Thursday, May 25, 2017.

U.S. West Texas Intermediate (WTI) crude CLc1 futures rose 77 cents to settle at $65.52 a barrel, a 1.2 percent gain.

A stronger dollar and rumors that OPEC will exit its supply quota plan have driven oil prices into the ground over the past week or so.

"A sea of red is washing over the energy complex as rising US production coupled with a looming relaxation in OPEC-led cuts sends bulls scurrying for the exits", said Stephen Brennock, analyst at London brokerage PVM Oil Associates.

Opec and a group of non-Opec countries including Russia, Mexico and Kazakhstan agreed in late 2016 to cut oil output by a combined 1.8 million barrels a day in an effort to boost oil prices.

In addition, investors fear that the OPEC + countries at a June meeting may decide to increase oil production amid a possible drop in supplies from Iran and Venezuela.

Despite signs of an impending rise in Opec production, "for the moment the output will remain low", ANZ bank said in a note on Tuesday.

But increasing United States crude oil production has also put pressure on oil prices. Another factor for WTI price at $65 is Oil production in U.S. reaching record high.