OLD BRIDGE, N.J. (DTN) -- Oil futures nearest to delivery traded on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled mostly lower with the exception of a modest gain by the West Texas Intermediate contract ahead of the Organization of Petroleum Exporting Countries biannual meeting in Vienna next Friday, with the market expecting OPEC and non-OPEC partners to agree to lift production.
Media reports indicate Saudi Arabia's oil minister, Khalid A. Al-Falih, will fly to Russia this week to discuss ways to manage output, with OPEC and 10 non-OPEC oil-producing countries led by Russia in the second year of a two-year production agreement. The agreement, reached in November 2016, reduces oil production by 1.8 million barrels per day (bpd) from October 2016 output levels, and is currently set to run through year end. However, the collapse in Venezuela's production and the expected decline in Iranian exports later this year amid U.S. re-imposed sanctions is prompting the discussions to add to world oil supply after crude prices spiked to multiyear highs in May, drawing the ire of consuming nations, including U.S. President Donald Trump.
Recent news reports cited Russia's oil minister, Alexander Novak, indicating as much as 1.5 million bpd of oil production could be added to the market. Saudi Arabia has been coy, but likely considering a smaller increase. Meanwhile, news reports indicate some members of OPEC want to maintain existing production cuts, and are unhappy with the Saudi discussions with Russia.
So far this year through May, OPEC data reveals Venezuela production is down 353,000 bpd to 1.392 million bpd as a result of mismanagement and an ongoing economic collapse.
"We assume no respite in the production collapse [in Venezuela] that has taken 1 million bpd off the market in the past two years," said Paris-based International Energy Agency in its monthly Oil Market Report early Wednesday.
At settlement, NYMEX July WTI futures were 25 cents higher to $66.89 per barrel (bbl), its highest settlement in nearly two weeks, while August WTI futures rose 17 cents to $66.69 bbl.
ICE August Brent, settled 80 cents lower, erasing much of Wednesday's gain, to $75.94 bbl, while September Brent finished 86 cents lower at $75.62 bbl.
NYMEX July RBOB futures fell 3.42 cents to $2.0910, erasing most of previous trade gains, while August RBOB futures slipped 3.11 cents to $2.0798 gallon in the seasonally backwardated market.
July ULSD fell 2.64 cents to $2.1587 gallon, erasing Wednesday gains, while the August USLD contract fell 2.57 cents to $2.1618 gallon at settlement.
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