Oil drops as market braces for more OPEC crude
Oil fell on Monday as investors prepared for an extra 1 million barrels per day (bpd) of oil to hit the markets after OPEC agreed to raise production and as U.S. equity markets slipped on trade war fears, APA reports quoting Reuters.
Brent crude futures LCOc1 fell $1.35 to $74.20 a barrel by 12:30 p.m. EDT (1630 GMT). U.S. light crude CLc1 retreated after an early rise to trade down 41 cents to $68.17 a barrel.
“The expectation that we’ll see more crude out of OPEC and that supplies in the U.S. will be tight because of the Syncrude outage… is going to keep the market on edge,” said Phil Flynn, analyst at Price Futures Group.
Losses in U.S. crude prices were limited by the likelihood that an outage at Syncrude Canada’s 360,000 barrel per day oil sands facility would last through July. The outage is expected to limit crude arriving at Cushing, Oklahoma, delivery point of the U.S. futures contract.
This helped further shrink U.S. crude’s discount to global benchmark Brent WTCLc1-LCOc1 to as small as $4.78. The spread had widened to as much as $11.57 on June 1, but had been contracting ahead of OPEC’s expected supply increase, analysts said.
The slide on Wall Street pressured oil, analysts said. All three major stock indexes were down on escalating U.S.-China trade tensions.
On Friday, the Organization of the Petroleum Exporting Countries and its allies agreed to modestly boost global crude supplies.
The group, which has been curbing output since 2017, said it would raise supply by returning to 100 percent compliance with previously agreed output cuts, after months of underproduction.
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