OLD BRIDGE, N.J. (DTN) -- Oil futures nearest to delivery traded on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange continued lower early Monday, as media reports over the weekend indicate Organization of the Petroleum Exporting Countries' member Saudi Arabia and non-OPEC oil producer Russia have begun boosting production ahead of a June 22 OPEC meeting in Vienna.
According to reports, Saudi Arabia boosted June output to 10.0 million barrels per day (bpd), a 100,000 bpd increase, while Russia lifted production to 11.1 million bpd, up from a 10.95 million bpd output level.
OPEC and non-OPEC members agreed to trim their output by a combined 1.8 million bpd starting in 2017 as a result of low world oil prices and a perceived oil supply glut, which now appears to have been resolved, OPEC said recently.
Some analysts already have priced in widely-expected supply additions from OPEC and non-OPEC members, while in the short-term are focusing on upcoming weekly supply reports from the American Petroleum Institute late Tuesday, and the Energy Information Administration Wednesday for price clues.
"I think we're looking ahead to tomorrow's inventory numbers from the American Petroleum Institute, and then we're headed off to Singapore," said Daniel Flynn, trade analyst with Chicago-based Price Futures Group. "If we make some headway on Korea, it will pretty much open up the door for more business for the U.S., and on the API's we're probably going to see some draws but, after last week's surprise builds you really don't know."
Prices tumbled on June 6 after the Energy Information Administration released weekly supply data that showed surprise builds in crude oil and oil products inventories. The losses were reversed June 7, when values reached their highest levels in a week on media reports showing crude and crude products from Venezuela could be curtailed by 53.7% or 805,000 bpd in June as a result of Conoco Phillips seizure of PDVSA export assets in the Caribbean. As the struggling state-owned oil company attempts to redirect tanker shipments from its own ports, analysts expect delays to mount as a result of limited loading capacity.
Near 9 a.m. EDT, NYMEX July West Texas Intermediate futures were off 73 cents to $65.01 per barrel (bbl), while the August contract fell 71 cents to $64.96 bbl. ICE August Brent was down 79 cents at $75.67 bbl, while September contracts dipped 76 cents to $75.43 bbl. NYMEX July RBOB declined 2.87 cents to $2.0866 gallon, while the July ULSD contract dipped 1.47 cents to $2.1496 gallon.
Traders also are expected to get additional pricing clues on Tuesday with the release of EIA's Short-term Energy Outlook and Monthly Oil Market Report from OPEC, and Wednesday when the International Energy Agency publishes its Oil Market Report.
Brian Whary can be reached at firstname.lastname@example.org
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