Oil mixed as OPEC cites uncertain market outlook

NEW YORK — Oil prices were mixed on Tuesday, with US crude settling higher before falling in post-settlement trading, and Brent slipping as investors prepared for a key meeting of the Organization of the Petroleum Exporting Countries ( OPEC) next week.

Brent crude futures fell 58 cents to settle at $75.88 a barrel, while US West Texas Intermediate ( WTI) crude futures climbed 26 cents to $66.36.

In post- settlement trading, however, WTI turned negative while Brent extended losses after data from the American Petroleum Institute showed a surprise build of 833,000 barrels in US crude stockpiles. Analysts had expected a decline of 2.7 million barrels.

A stronger greenback and the euro’s weakness was putting some pressure on Brent prices, said Phillip Streible, senior market strategist at RJO Futures.

A strong dollar makes green back-denominated oil more expensive for holders of other currencies.

“I was looking for an up day (for WTI) — in just a few weeks it had fallen from around $73 (a barrel) to $65… and even for the window of seasonal decline, that’s a big move to go uncorrected,” said Walter Zimmerman, chief technical analyst at ICAP-TA.

The OPEC released its monthly report on Tuesday, saying uncertainty was hanging over the global oil market.

OPEC and other producing countries including Russia have cut oil output by 1.8 million barrels per day ( bpd) since January 2017 in an effort to boost the market. OPEC holds its next meeting on June 22-23, and is expected to decide on future supply policy.

With US sanctions threatening to cut Iranian exports and the potential for more declines in Venezuelan production, Saudi Arabia and Russia have indicated they would be willing to make up for any supply shortfall.

US production is expected to rise by less than previously expected, to 11.76 million bpd next year, the US Energy Information Administration said.

Still, OPEC said the outlook for the second half of 2018 is uncertain, even though the group’s figures show a global glut is gone.

On Monday, Iraq’s oil minister said producers should not be pressured to pump more oil.

Nonetheless, PVM Oil Associates strategist Tamas Varga said: “I feel that if they would like to be a responsible swing producer for the global oil market, based on their (demand) numbers, they should increase production by at least 1 million bpd from the current level.” —