London — Oil prices steadied on Monday as US production hit a record high and Opec members considered boosting supply to balance rising global demand.
Benchmark Brent crude oil was unchanged at $76.79 a barrel by 8.45am GMT. US light crude was up five US cents at $65.86 a barrel. Last week, the US contract lost about 3%, adding to a near 5% fall from the week before.
“We are going into summer, the high demand season, and I think we are going to see a fall in US crude oil inventories, but shale oil output is growing. Which one is going to win is the issue,” said Tony Nunan, risk manager at Mitsubishi.
US crude production climbed in March to 10.47-million barrels per day, a monthly record, data from the Energy Information Administration showed last week.
US drillers added two oil rigs in the week to June 1, bringing the total to 861, the most since March 2015, energy services firm Baker Hughes said on Friday. That was the eighth time drillers have added rigs in the past nine weeks.
Arab oil ministers agreed at the weekend on the need for continued co-operation between members of oil cartel Opec and other big producers to balance global supply, Kuwait’s state news agency Kuna reported on Sunday.
Opec ministers from Saudi Arabia, the United Arab Emirates, Kuwait and Algeria along with their counterpart from nonOpec Oman, met unofficially in Kuwait on Saturday.
Opec meets formally on June 22 to set oil policy. It is expected to agree to raise output to cool the market amid worries over Iranian and Venezuelan supply and after Washington raised concerns the oil rally was going too far, Opec sources familiar with the discussions said in May.
Saudi Arabia — the effective leader of Opec — and Russia have discussed boosting output to compensate for supply losses from Venezuela and to address concerns about the effect of US sanctions on Iranian output.
Russia’s largest oil producer, Rosneft, will be able to restore 70,000 barrels per day of oil output in just two days if global production limits were lifted, Renaissance Capital wrote in a client note.
Hedge funds and other money managers cut their bullish wagers on US crude futures and options, according to data released on Friday, as oil prices slumped on oversupply fears.
Tamas Varga, analyst at London brokerage PVM Oil Associates, said financial investors and money managers were becoming “less enthusiastic about any further upside potential”.
He asked: “Why would they otherwise keep cutting their net length?”