Oil prices mixed, but pressure persists from plan to raise production

Seoul — Oil prices were mixed in Asian trading on Tuesday, but remained under pressure from expectation that Saudi Arabia and Russia will start pumping more crude to ease a potential shortfall in supply.

Brent crude futures were up 31c or 0.41% at $75.61 a barrel at 2.13am GMT, after settling at their lowest since May 8 at $75.30.

US West Texas Intermediate (WTI) crude was down $1.05 or 1.55% at $66.83 a barrel, sitting near its lowest since April 17.

“Investors have started pricing in the likelihood of Saudi Arabia and Russia increasing crude oil production,” ANZ Bank said in a note.

“However, doubt remains, with any agreement to be finalised at the June Opec meeting.”

Concern that Saudi Arabia and Russia could boost output has put downward pressures on oil prices, as has rising oil production in the US.

Saudi Arabia and Russia have discussed raising Opec and non-Opec oil production by about 1-million barrels a day to make up potential supply shortfalls from Venezuela and Iran.

The Organisation of the Petroleum Exporting Countries (Opec) is due to meet in Vienna on June 22.

The spread between Brent and WTI stands at about $8.70 a barrel, the widest since March 2015 due to the depressed price of US crude compared with Brent.

NH Investment & Securities commodities analyst Vincent Hwang said in Seoul: “The way I see it is that WTI prices are stabilising rather than falling after rising sharply in recent weeks because the prices were expected to be in the range of $55-$65 a barrel.

“But at the same time there are some worries over a fall in US oil demand if more Middle East crude supplies flow into the market.”

Meanwhile, record crude oil volumes from the US are expected to head to Asia in coming months, nibbling away at the market share of Opec and Russia.

US oil production has surged by more than 27% in the past two years to 10.73-million barrels a day. That puts the US ahead of top exporter Saudi Arabia, and only Russia pumps out more, at about 11-million barrels a day.

Reuters