Oil has hit its longest loss since February, as investors weighed Saudi Arabia and Russia's proposal to increase production to ease worries about supply shortages.
New York crude oil futures fell 1.6 percent on Tuesday, down 4 percent on Friday. Saudi Arabia and Russia said on Friday that they could restore some of the production that was discontinued as part of a deal between OPEC and potential losses from other members, notably Venezuelan supply and Iran. There was no severance pay Monday due to the US Memorial Day holiday and all stores will be booked on Tuesday.
Crude earlier this month rose to its highest level in more than three years after US President Donald Trump decided to reintroduce sanctions on Iran and as Venezuelan production continues to decline amid an economic and political crisis. Goldman Sachs Group Inc. retains its (1965 09005) bullish view on prices. A production increase from Russia and Saudi Arabia would only compensate for involuntary production declines and demand remains strong.
"Oil broke out in panic Expectations that Saudi Arabia and Russia will increase production will ease the balance between supply and demand," said Takayuki Nogami, chief economist of state-backed Japan Oil, Gas & Metals National Corp. by telephone from Tokyo. "Now the market digests that information."
West Texas Intermediate for July fell 3.1 percent to $ 65.80 a barrel before trading on the New York Mercantile Exchange at $ 66.80: $ 44 in Tokyo. The futures are focused on a 5th session of haircuts, the longest since 9th February. Prices fell $ 2.83 on Friday to $ 67.88, the biggest loss since July 5th.
Brent futures for the July settlement added 23 cents, or 0.3%, at $ 75.53 a barrel on the London Stock Exchange ICE Futures Europe. Prices on Monday lost $ 1.14 to $ 75.30. Global benchmark crude oil traded at $ 8.72 on WTI in the same month.
Futures for the September delivery climbed 0.5 percent to 465.2 yuan on the Shanghai International Energy Exchange. The contract fell 3.1 percent to 462.8 yuan on Monday, as trading rose to its highest level since the start of futures on March 26.
On the table
OPEC and its allies will gradually increase oil production In the second half, Saudi Energy Minister Khalid Al-Falih said at the St. Petersburg International Economic Forum in Russia last week. He and his Russian colleague Alexander Novak said that while the delivery restrictions were "on the table", no decision had been made.
"While all roads point to OPEC's increase in production, the real question is how much," Stephen Innes, director of commerce at Oanda Corp., said in a note.
The plan for OPEC and its allies to increase production again is fueled by growing concern that oil prices are eroding consumption at a high level, and that Venezuela and the removal of Iranian barrels from the global market create a supply and supply deficit , Venezuela today produces only 1.4 million barrels a day, down from 3 million barrels a day a few years ago, while UBS AG Wealth Management predicts a decline of about half a million barrels from Iran] Saudi Arabia and Russia's proposal to revive production signals are currently scarce and not bearish, wrote Goldman analyst Damien Courvalin in a report. A phased implementation of a 1 million barrel per day production plan would continue to dampen the market deficit by the third quarter of 2018, Goldman said.
Other News from the Oil Market:
- The Canadian Government is Probable Buys Children's Oil Line Morgan Canada Ltd. Trans Mountain and their controversial expansion project to make sure it's built, a person familiar with conversations.
- Subtropical Storm Alberto lost strength landing ashore near Laguna Beach, Florida, causing heavy rains that threaten the US South with $ 1 billion in economic losses.