Oil prices slip as Iraq raises ex­ports

The Pak Banker - - 6BUSINESS -

Oil prices edged lower to­ward $49 a bar­rel on Mon­day as Iraq raised its crude ex­ports tar­get ahead of an OPEC meet­ing while Cana­dian pro­duc­tion was set to restart af­ter huge wild­fires.

At­ten­tion turned to a meet­ing of the Or­ga­ni­za­tion of the Pe­tro­leum Ex­port­ing Coun­tries (OPEC) in Vienna on Thurs­day, though most an­a­lysts did not ex­pect any changes in the group's pro­duc­tion.

While OPEC has been un­able to agree on an out­put freeze in an ef­fort to sup­port prices, Iraq was the lat­est Mid­dle East pro­ducer to raise its ex­port quota ahead of the meet­ing, sup­ply­ing 5 mil­lion bar­rels of extra crude to its part­ners in June.

"We do not ex­pect any (OPEC) agree­ment on a spe­cific pro­duc­tion tar­get to be achieved," Com­merzbank an­a­lysts said in a note. "Iraq plans to dis­cuss freez­ing oil pro­duc­tion, but Iran and Saudi Ara­bia are un­likely to be ready to take any such step."

Brent crude fu­tures LCOc1 were at $49.27 a bar­rel at 1222 GMT (8.22 a.m. ET), down 5 cents, while U.S. West Texas In­ter­me­di­ate (WTI) crude fu­tures CLc1 was down 6 cents at $49.27. Strength­en­ing of the dol­lar .DXY on higher ex­pec­ta­tions for a near-term U.S. in­ter­est rate rise also weighed on com­modi­ties priced in the cur­rency.

Trade was sub­dued be­cause of pub­lic hol­i­days in Bri­tain and the United States, where Mon­day's Memo­rial Day is seen as the tra­di­tional start of U.S. sum­mer driv­ing sea­son.

Vienna-based con­sul­tancy JBC En­ergy said that global oil de­mand be­tween Jan­uary and April rose by 1.5 mil­lion bar­rels per day from a year ear­lier. That was stronger than many fore­casts and was driven by strong con­sump­tion in the United States, China and In­dia.

U. S. crude out­put also dropped to its low­est since Septem­ber 2014 af­ter oil drillers cut rigs for a ninth week in 10 de­spite the re­cent rally in oil prices.

An ex­pected rise in Cana­dian oil sands pro­duc­tion also weighed on WTI, traders said.

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