Oil nears 2018 highs ahead of OPEC + meeting

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  • OPEC and associated oil producers to meet on July 1
  • OPEC + could increase production by 500,000 bpd in August – ANZ, ING
  • US Adds Platforms For 11th Month In A Row – Baker Hughes

SINGAPORE, June 28 (Reuters) – Oil prices reached and then fell highs last reached in October 2018, as investors considered the outcome of this week’s OPEC + as the United States and Iran are vying to revive a nuclear deal, delaying a surge in Iranian oil exports.

Brent crude for August was down 16 cents, or 0.2%, to $ 76.02 a barrel at 3:18 a.m. GMT, while US West Texas Intermediate crude for August was at $ 73.93 a barrel, down from 12 cents, or 0.2%.

Oil prices rose for a fifth week last week as fuel demand rebounded on strong economic growth and increased travel during the summer in the northern hemisphere, while global crude supplies remained tight as the Organization of the Petroleum Exporting Countries (OPEC) and their allies maintained production cuts.

The producer group, known as OPEC +, puts 2.1 million barrels per day (bpd) back on the market from May to July as part of a plan to phase out record restrictions on oil production from last year. OPEC + meets on July 1 and could further ease supply cuts in August as oil prices rise due to picking up demand. Read more

“The recovery in demand has taken everyone by surprise and OPEC must respond,” said Howie Lee, an economist at Singapore’s OCBC bank.

“There is some leeway to ease supply restrictions given the high prices, and we could see a 250,000 bpd increase from August.”

ANZ and ING expect OPEC + to increase production by around 500,000 bpd in August, which should support price increases.

“Anything below that amount would likely be enough to see the bulls push the market higher in the near term,” ING analysts said in a note.

A Singapore-based oil analyst said oil prices are unlikely to see a significant correction unless OPEC + increases supplies by 1 million bpd or more.

Negotiations on the relaunch of the Iran nuclear deal are expected to resume in the coming days. A monitoring agreement between Tehran and the UN nuclear watchdog lapsed last week. Read more

A weaker US dollar (.DXY) and a reversal in risk appetite in global markets also supported dollar-denominated commodity prices.

The United States added 13 oil and gas platforms in June, up for an 11th consecutive month along with higher oil prices, despite being the smallest monthly increase since September 2020, have Baker Hughes data showed Friday. Read more

Reporting by Florence Tan; Editing by Christopher Cushing

Our Standards: The Thomson Reuters Trust Principles.


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