Oil Mixed in Early Trade

OLD BRIDGE, N.J. (DTN) -- Oil futures nearest to delivery traded on the New York Mercantile Exchange (NYMEX) and Brent crude on the Intercontinental Exchange (ICE) were mixed in early trade Tuesday as Brent crude values rose in response to overnight shelling into Israel, provoking Israeli airstrikes.

Other contracts remained under pressure from reports Organization of Petroleum Exporting Countries (OPEC) and its 10 non-member nations would increase oil production ahead of the next OPEC meeting in Vienna June 22. Last week, this news sent contracts to three-week lows.

While earlier reports indicated energy ministers of Saudi Arabia, Russia and the United Arab Emirates would increase output by 1.0 million barrels per day (bpd), the latest reports indicate that Russia is pushing for an 800,000 bpd increase in their joint agreement while Saudi Arabia is calling for an increase between 300,000 and 400,000 bpd.

OPEC producers currently are in year two of a two-year pact aimed at trimming supply and adding stability to world oil prices following a 2014 perceived world oil glut.

In late 2016, OPEC and 10 non-OPEC oil producing countries led by Russia agreed to reduce production by 1.8 million bpd from October 2016 output rates to trim the global supply glut. The cuts took effect Jan. 1, 2017 and were expected to run through year end, however, with oil production from Venezuela plunging and sanctions potentially impacting Iran’s oil exports, pressure on OPEC to step in and reduce supply cuts became intense, traders said.

Near the 9 a.m. ET open, NYMEX July West Texas Intermediate crude futures fell 80 cents to $67.08 barrel (bbl), while the August contract fell 77 cents to $67.42 bbl. The ICE July Brent contract was 68 cents higher at $75.98 bbl, while August rose 70 cents to $76.02 bbl.

NYMEX June RBOB futures slipped a little more than 2 cents to $2.1613 gal, while the June ULSD contract slipped 1.223 cents to $2.1975 gal.

Brian Whary can be reached at brian.whary@dtn.com