London — Oil edged lower on Thursday on the expectation of a rise in US crude inventories and the prospect of increased output from Opec later this year.
The oil price slid to a three-week low below $75 a barrel on Monday after oil cartel Opec and its non-Opec allies including Russia indicated they could adjust their deal to curb supplies and increase production.
Although the price of benchmark Brent crude has recovered some ground since then to trade around $77, investors remain cautious before an Opec meeting on June 22 when it will decide on its policy.
Sources told Reuters that Saudi Arabia, the effective leader of Opec, and Russia were discussing boosting output by about 1-million barrels a day to compensate for losses in supply from Venezuela and to address the concern about the effect of US sanctions on Iranian output.
At 9.23am GMT, Brent crude futures were down 31c at $77.41 a barrel, reversing some of Wednesday’s 3% rise. US West Texas Intermediate (WTI) crude was down 39c at $67.82 a barrel.
“If this is a real correction, then the price should get down to the low $70s or even the mid-$60s,” SEB chief commodities analyst Bjarne Schieldrop said. “The market needs to be cautious ahead of the Opec meeting.” Opec and non-Opec producers have committed to cut output by 1.8-million barrels a day until the end of 2018.
A Gulf source familiar with Saudi Arabia’s thinking said Opec and its allies aim to continue their agreement to cut oil output through the end of the year, but they are ready to make adjustments to offset any supply shortfall.
“With the Opec meeting still another three weeks away, oil prices are likely to remain sensitive to headlines,” ANZ bank said in a note.
Global inventories have been broadly falling, but US crude stockpiles rose by 1-million barrels in the week to May 25, according to the American Petroleum Institute (API). That beat analyst expectations for a decrease of 525,000 barrels.
Data from the Energy Information Administration (EIA) is due at 3pm GMT on Thursday, a day later than usual due to a US public holiday on Monday.