Oil retreats after bull run on rising OPEC exports, strong dollar
Rising output from producers may hamper rebalancing: IEA
LONDON: Oil prices fell more than 1 percent on Wednesday, ending their longest bull run in more than five years, as climbing exports from the Organization of the Petroleum Exporting Countries (OPEC) and a stronger dollar turned sentiment more bearish.
Benchmark Brent crude futures were down 57 cents, or 1.2 percent, at $49.04 a barrel by 1020 GMT. Prices had climbed for eight straight sessions to Monday.
US West Texas Intermediate (WTI) crude futures were down 63 cents, or 1.3 percent, at $46.44 a barrel after reaching a one-month high of $47.32 earlier in the session.
“The air is getting thin for oil prices. The price increase just ran out of steam, which is not very surprising, given the rising OPEC supplies,” said Carsten Fritsch, a senior commodity analyst at Commerzbank.
Another analyst said the strong dollar provided less incentive to invest in greenback-denominated commodities such as crude oil.
Oil exports by OPEC climbed for a second month in June, Thomson Reuters Oil Research data showed.
OPEC exported 25.92 million barrels per day (bpd) in June, up 450,000 bpd from May and 1.9 million bpd more than a year earlier.
The rise in exports comes despite OPEC’s vow to rein in production until March 2018 and follows hot on the heels of Reuters’ monthly OPEC production survey which found output jumped to a 2017 high last month as OPEC members Nigeria and Libya continued to pump more oil.
Nigeria and Libya are both exempt from the output pact. The head of the International Energy Agency (IEA) told Reuters that rising output from key oil producers could hamper expectations that the oil market would rebalance in the second half of the year.
Traders were also eyeing weekly US crude inventory data, delayed by a day due to the US public holiday on Tuesday.
A Reuters poll showed analysts expected weekly crude stocks to have fallen by 2.8 million barrels. The weekly data showed a surprise rise in inventories last week.
Underlining an expected shift in longer-term oil demand, car group Volvo said on Wednesday that from 2019 all of its new models would be fully electric or hybrid vehicles.