Oil surges amid disagreement over relaxing output curbs

OIL TRADED near $66 (R870.17) a barrel as producing countries disagreed over relaxing output curbs, while investors assessed the significance of a declaration signed by US President Donald Trump and North Korean leader Kim Jong-un.

Futures in New York were little changed after a 0.6 per- cent increase on Monday.

Saudi Arabia and Russia are trying to garner support for lifting production limits, while Iraq joined Venezuela and Iran in opposing the proposal.

Meanwhile, Trump and Kim pledged to work towards the complete denuclearisation of the Korean peninsula, at the end of a historic summit aimed at easing tensions between the two adversaries.

Oil has slumped since late May after Saudi Arabia and Russia signalled they are ready to relax output curbs to make up for potential supply disruptions from other producers. Both nations, which have started to boost production, may propose a gradual increase when Opec and its allies meet in Vienna on June 22 and 23.

West Texas Intermediate (WTI) crude for July delivery traded at $66.24 a barrel on the New York Mercantile Exchange, up 14 cents, at 10.47am London time, following a 36c gain on Monday. Total volume traded was about 16 percent below the 100-day average.

Brent futures for August settlement rose 28c to $76.74 a barrel on the London-based ICE Futures Europe exchange. The global benchmark traded at a $10.57 premium to WTI for the same month.

The split among Opec members appears to be deepening ahead of the key meeting in Vienna later this month. Iraq “rejects unilateral decisions made by some producers which do not consult with the rest”, Oil Minister Jabbar al-Luaibi said in a statement. This came after Iran and Venezuela wrote to Opec members urging them to unite against pressure from America to ease the curbs.

Still, Saudi Arabia and Russia are showing signs of weakening their commitment to production cuts under the agreement that took effect in January 2017.

Saudi Arabia boosted oil output to 10.03 million barrels a day in May. Russia raised production to the highest in 14 months in the first week of June as some oil companies breached their caps, according to a person with knowledge of the matter. – Bloomberg