Oil Prices Fall as OPEC Nears Deal to Raise Production

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Oil prices fell on Thursday as crude exporters in
OPEC appeared to be nearing a deal to increase production.
Benchmark Brent crude LCOc1 was down 60 cents a barrel at $74.14 by 0725 GMT.
U.S. light crude CLc1 was 35 cents lower at $65.36.
Brent reached a 3-1/2-year high above $80 a barrel
last month but has fallen steadily in recent weeks as Saudi Arabia, de facto
leader of OPEC, has signaled it intends to raise production to stabilise
prices.
The Organisation of Petroleum Exporting Countries
holds its biannual meeting in Vienna on Friday and is widely expected to agree
to pump more, possibly supported by some other producers outside OPEC,
including Russia.
Iran had been expected to oppose any rise in crude
output, but it has now signaled it may support a small increase.
“It would seem that an aggregate increase in
production for OPEC+ of between 500,000 barrels per day (bpd) and 1 million bpd
is the range that is being considered,” Harry Tchilinguirian, head of oil
strategy at French bank BNP Paribas, told Reuters Global Oil Forum.
Stephen Innes, head of trading for Asia-Pacific at
futures brokerage OANDA, agreed: “There appears to be an air of confidence that
this deal will move through.”
OPEC, together with other key producers including
Russia, started withholding output in 2017 to prop up prices, but a tightening
market has led to calls by consumers for more supplies.
Looming over all financial markets is an escalating
trade dispute between the United States and its other major trading partners,
particularly China.
Washington and Beijing have both threatened
punitive tariffs on each other’s exports, including U.S. crude oil.
China on Thursday canceled a trip to West Virginia
by executives from China Energy Investment Corp to discuss a planned $83.7
billion investment in the state and called Washington’s behavior “capricious.”
In another escalation, India on Thursday joined
China and the EU by increasing duties on various commodities imported from the
United States.
But oil prices have found some support from global
demand, which has been increasing strongly this year.
U.S. refineries processed a seasonal record of 17.7
million bpd of crude oil last week, the Energy Information Administration (EIA)
said on Wednesday. [EIA/S]
Commercial U.S. crude inventories dropped by 5.9
million barrels in the week to June 15, to 426.53 million barrels C-STK-T-EIA,
the EIA said. (Reuters)
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