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U.S. West Texas Intermediate and international-benchmark Brent crude oil rebounded from early losses to close higher on Monday, as bullish comments from the Iraqi oil minister raised doubts as to whether OPEC would decide to boost output at its upcoming meeting.
July WTI crude oil settled at $2.963, up 0.073 or +2.46% and August Brent crude oil settled at $76.40, down $0.06 or -0.08%.
Early in the session, prices fell in response to a bearish report from JPMorgan on Friday that said, ‘Non-OPEC supply is expected to rise sharply in 2019, led by U.S. shale growth, along with Russia, Brazil, Canada and Kazakhstan.”
Also pressuring prices was a report from over the week-end from Russian news agency Interfax. It said on Saturday that Russia’s oil output had risen to 11.1 million bpd in early June, up from slightly less than 11 million bpd for most of May and above its target output of under 11 million bpd.
Finally, sellers were also responding to another rise in new rigs drilling for oil in the United States. According to Baker Hughes, the rig count rose by one last week to 862, it’s highest since March 2015. This suggests U.S. crude output, already at a record 10.8 million bpd, will climb further.
The market hit its low for the session and turned higher after Iraq’s oil minister said producers should not be influenced by pressure to pump more oil.
The minister, Jabar al-Luaibi, said that oil prices still require support and stability, and producers “should not over-exaggerate” the oil markets need for more supplies.
According to a statement, the minister also “rejects unilateral decisions by some oil producers without consulting the rest of the members’” of the OPEC and non-OPEC producers who took part in the reduction agreement.
Forecast
Crude oil futures are trading mixed early Tuesday on low volume as traders awaited the outcome of a summit between U.S. President Donald Trump and North Korean leader Kim Jong-un in Singapore.
At 0325 GMT, July WTI crude oil is trading $66.12, up $0.02 or +0.03% and August Brent crude oil is at $76.39, down $0.07 or -0.09%.
We continue to expect a two-sided trade as investors prepare for the OPEC meeting in Vienna on June 22. Traders aren’t sure what to expect from the meeting.
Earlier in the month, the market sold off sharply as investors priced in the possibility of increased production from Saudi Arabia, Russia and other major producers. However, the market bottomed last week after Venezuela said it may have to cancel all of its delivery contracts. On Monday, Iraq suggested it would not back a plan to raise production.