LONDON, June 21 — Oil prices fell today as crude exporters in OPEC appeared to be nearing a deal to increase production.
Benchmark Brent crude fell US$1.10 (RM4.42) a barrel to a low of US$73.64 before recovering slightly to US$73.74, down US$1.00 by 0820 GMT. US light crude was 65 cents lower at US$65.06.
Brent reached a 3-1/2-year high above US$80 a barrel last month but has fallen steadily in recent weeks as Saudi Arabia, de facto leader of OPEC, has signalled it intends to raise production to stabilise prices.
The Organisation of the Petroleum Exporting Countries holds its biannual meeting in Vienna on Friday and is widely expected to agree to pump more, possibly supported by some other producers outside Opec, including Russia.
Iran had been expected to oppose any rise in crude output, but it has now signalled it may support a small increase.
“It would seem that an aggregate increase in production for Opec of between 500,000 barrels per day (bpd) and 1 million bpd is the range that is being considered,” Harry Tchilinguirian, head of oil strategy at French bank BNP Paribas, told Reuters Global Oil Forum.
Stephen Innes, head of trading for Asia-Pacific at futures brokerage OANDA, agreed: “There appears to be an air of confidence that this deal will move through.”
OPEC, together with other key producers including Russia, started withholding output in 2017 to prop up prices, but a tightening market has led to calls by consumers for more supplies.
Escalating trade dispute
Looming over all financial markets is an escalating trade dispute between the United States and its other major trading partners, particularly China.
Washington and Beijing have both threatened punitive tariffs on each other’s exports, including US crude oil.
China today cancelled a trip to West Virginia by executives from China Energy Investment Corp to discuss a planned US$83.7 billion investment in the state and called Washington’s behaviour “capricious.”
In another escalation, India today joined China and the EU by increasing duties on various commodities imported from the United States.
But oil prices have found some support from global demand, which has been increasing strongly this year.
US refineries processed a seasonal record of 17.7 million bpd of crude oil last week, the Energy Information Administration (EIA) said yesterday.
Commercial US crude inventories dropped by 5.9 million barrels in the week to June 15, to 426.53 million barrels, the EIA said. — Reuters
