Oil prices bounce on prospect of fall in US inventories

Seoul — Oil prices rebounded on Tuesday, after falling in the previous session, on expectation that inventories in the US may decline.

However, increasing US production and concern that Opec may raise output continued to weigh on sentiment.

Brent crude futures added 14c or 0.19% to $75.43 a barrel at 3.01am GMT, after settling 2% lower at $75.29 on Monday.

US West Texas Intermediate (WTI) crude was up 32c or 0.49% at $65.07 a barrel. It finished the previous session 1.6% lower at $64.75.

“It’s all about supply, whether it’s Opec raising output or US increasing production, all roads lead to higher global oil supplies, which is leaving oil traders shaking in their boots,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.

Reuters technical analyst Wang Tao said Brent may test a support at $75.05 a barrel, while WTI may test a support zone of $64.33-$64.41.

“The gains are seen to be a technical rebound from the last session’s losses, but the market’s focus is on the Opec meeting and how much Saudi Arabia and Russia would increase output,” said Kim Kwang-rae, commodity analyst at Samsung Futures in Seoul.

The Organisation of the Petroleum Exporting Countries (Opec) is due to meet in Vienna on June 22 to decide whether the group and non-Opec members, including Russia, will raise production to ease concern about potential supply shortfalls from Iran and Venezuela.

Opec and non-Opec Arab oil ministers agreed at the weekend on the need for continued co-operation to balance global supply, Kuwait’s state news agency, Kuna, reported.

Increasing US crude oil production has also put pressure on oil prices.

In March, US crude output rose to 10.47-million barrels a day, the highest on record, according to a monthly report by the Energy Information Administration (EIA).

The number of rigs drilling in the US was also up by two in the week to June 1, bringing the total to 861, the most since 2015, General Electric’s Baker Hughes energy services said on Friday.

Industry group American Petroleum Institute (API) is due to release its data for last week’s US crude oil inventories at 8.30pm GMT on Tuesday, and the EIA report is scheduled at 2.30pm GMT on Wednesday.

US crude stocks were forecast to fall by about 2.5-million barrels on average in the week ended June 1, according to five analysts polled ahead of the reports.

The US is the world’s biggest oil consumer.

Reuters