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Oil Prices Extend Losses As OPEC + Uncertainty Persists

  • Saudi Arabia, UAE still deadlocked, Russia steps in to save OPEC + deal
  • U.S. crude production in 2021 to decline less than previous forecast-EIA
  • Coming soon: EIA weekly inventory data at 3:00 p.m. GMT

SINGAPORE, July 8 (Reuters) – Oil prices fell for a third day on Thursday amid supply uncertainty after the collapse this week in talks between major producers that could potentially lead to the abandonment of the current production agreement.

Brent crude oil futures fell 23 cents, or 0.3%, to $ 73.20 a barrel at 0644 GMT, while US West Texas Intermediate futures fell 33 cents, or 0 , 5%, at $ 71.87 per barrel.

Brent prices have fallen about 5% since Monday’s close after talks between the Organization of the Petroleum Exporting Countries and its allies, including Russia, known as OPEC +, collapsed when the de facto leader Saudi Arabia has refused requests from the UAE to increase production. as part of the group’s supply cut-off agreement.

“The oil market is looking past the oil supply deficit in August and expects the OPEC + deal to collapse well before April 2022, when the deal expires, as other countries members will seek further concessions to gain more market share, ”said Edward Moya, senior. market analyst at OANDA.

OPEC + has restricted supply for more than a year since demand collapsed during the coronavirus pandemic.

The group maintains nearly 6 million barrels per day (bpd) of production cut and was expected to increase supply, but three days of meetings failed to close divisions between the Saudis and the Emiratis.

Russia is trying to mediate between Saudi Arabia and the United Arab Emirates to help strike a deal to boost oil production, three OPEC + sources said on Wednesday. Read more

Prices found some support in a sharp drop in oil inventories in the United States.

Oil inventories of the world’s largest user of oil fell 8 million barrels for the week ending July 2, two market sources said, citing figures from the American Petroleum Institute, against an estimate of one. analysts fell 4 million barrels in a Reuters poll.

Government inventory data is due Thursday, pushed back a day after the July 4 US vacation on Monday.

The decline in U.S. oil production this year is expected to ease, with the Energy Information Administration (EIA) saying on Wednesday that production will be 11.10 million bpd in 2021, down 210,000 bpd per year. compared to 2020, compared to its previous forecast of a decline of 230,000 bpd. Read more

Concerns over the coronavirus, however, have weighed on prices, with Japan, the world’s fourth-largest oil user, preparing to declare a state of emergency for the Tokyo area until mid-August 22. a new wave of infections and South Korea reporting its highest level on record. daily cases of COVID-19. Read more

Reporting by Jessica Jaganathan; Edited by Christian Schmollinger

Our Standards: Thomson Reuters Trust Principles.

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