Oil Prices Drop on Expected Supply Increase

Bozorgmehr Sharafedin
Thursday, July 15, 2021

Oil prices fell on Thursday, extending losses as investors braced for increased supplies after a compromise deal between leading OPEC producers and as U.S. fuel stocks rose, raising concerns over demand in the world's largest consumer.

Brent crude dropped 52 cents, or 0.7%, to $74.24 a barrel by 0850 GMT and U.S. West Texas Intermediate (WTI) crude was down 72 cents, or 1%, at $72.41.

Both benchmarks slid more than 2% on Wednesday after Reuters reported that Saudi Arabia and the United Arab Emirates (UAE) had reached a compromise that should pave the way for a deal to supply more crude to a tight oil market and cool soaring prices.

"The market is not taking any chances. Prices are very overbought anyway, so traders might want to take some money off the table before the deal is concrete," said Avtar Sandu, senior commodity trader at Phillips Futures in Singapore.

Talks among the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, had broken down this month after the UAE objected to an extension to the group's supply pact beyond April 2022.

However, analysts at Goldman Sachs, Citi, and UBS expect supplies to remain tight in the coming months even if OPEC+ finalizes an agreement to raise output.

"With the oil market already in deficit and demand growth outpacing supply growth, the crude market will likely tighten further this summer," said UBS analyst Giovanni Staunovo.

"We believe ongoing declines in global oil inventories could boost Brent to $80 per barrel and WTI to $77 per barrel between now and September."

In the United States, crude stockpiles fell for an eighth straight week last week, but gasoline and diesel inventories rose despite a drop in refinery utilization rates, data from the Energy Information Administration showed on Wednesday.

The large drawdown in crude stocks did little to boost oil prices as traders focused on the first rise in total petroleum stocks since early June, analysts said.

However, the world's top crude importer, China, on Thursday reported record crude processing volumes at its refineries in June, easing some of the downward pressure on oil prices.

Elsewhere, the prospect of a quick return of Iranian oil supplies to global markets has been pushed back as negotiations over the revival of the 2015 nuclear deal will not resume until mid-August when the new president takes office. 

(Reporting by Bozorgmehr Sharafedin in London Additional reporting by Florence Tan in Singapore Editing by David Goodman )

 

Categories: Energy Vessels Industry News Activity Production Oil Price

Related Stories

Four Jack-Up Drilling Rig Deals Set to Bring In $129M for Borr Drilling

Petrovietnam, Partners Sign PSC for Block Off Vietnam

Thailand's PTT to Buy LNG from Glenfarne's Alaska LNG Project

CNOOC Starts Production at Offshore Field in South China Sea

BP Expands Oil and Gas Scope in Azerbaijan with New Projects and Exploration Rights

ABS Greenlights SHI’s Multi-Purpose Deepwater LNG Floating Unit

Sapura Energy Nets $22.6M in Offshore Support Vessel Contracts

Pakistan’s OGDC to Start Production at ADNOC’s Offshore Block by 2027

INEOS Wraps Up Acquisition of CNOOC’s US Oil and Gas Assets

CNOOC Sees 11% Profit Growth in 2024 Driven by Record Oil Production

Current News

Santos and QatarEnergy Agree Mid-Term LNG Supply

PTTEP Hires Energy Drilling’s Rig for Southeast Asia Offshore Job

One Shelf Drilling Rig Up for New Job in India, Other for Disposal

Four Jack-Up Drilling Rig Deals Set to Bring In $129M for Borr Drilling

PTTEP Hires Velesto’s Jack-Up Rig for Drilling Campaign off Malaysia

Yinson Production Secures $1.17B Refinancing for FPSO Maria Quitéria

Centrica and Thailand’s PTT Ink Long-Term LNG Supply Deal

Petrovietnam, Partners Sign PSC for Block Off Vietnam

Japan Protests China’s New Oil and Gas Construction Activities in East China Sea

CNOOC Signs Hydrocarbons Exploration and Production Deal with Kazakhstan

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com