By Henning Gloystein
SINGAPORE (Reuters) – Oil prices dipped on Monday, dragged down by plentiful supply as U.S. exports soar and compete with traditional producers from the Middle East in key markets such as Asia.
But markets were supported by optimism that Washington and Beijing would soon resolve a series of trade disputes that have dented global economic growth, analysts said.
International futures were at $67 a barrel at 0712 GMT, down 12 cents, or 0.2 percent, from their last close. They ended Friday little changed after touching their highest since Nov. 16 at $67.73 a barrel.
U.S. West Texas Intermediate (WTI) crude futures were at $57.20 per barrel, down 6 cents, or 0.1 percent, from their last settlement. WTI futures climbed 0.5 percent on Friday, having marked their highest since Nov. 16 at $57.81 a barrel.
Traders said the dips were the result of ample oil supply amid surging exports from the United States, forcing other producers especially in the Middle East to start offering their crude at discounts.
Under pressure from that growth in U.S. supply, Abu Dhabi’s flagship Murban crude has sold at a discount in Asia to its official selling price (OSP) for four straight months – the longest stretch in nearly two years.
Cargoes bought for loading in the first four months of 2019 were sold at discounts ranging from 5 cents to 40 cents a barrel, even as producer Abu Dhabi National Oil Company (ADNOC) cut the grade’s benchmark price for four consecutive months.
oil production has hit a record 12 million barrels per day (bpd), an increase of more than 2 million bpd since early 2018. Exports hit a record 3.6 million bpd this month.
The surge in U.S. oil output counters efforts led by the Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) to cut output to tighten the market and prop up prices.
The OPEC-led cuts as well as U.S. sanctions against Iran’s and Venezuela’s oil exports pushed oil prices to 2019 highs last week.
While ample supply weighed on prices, trade optimism supported financial markets, including crude futures.
President Donald Trump said on Sunday he would delay an increase in U.S. tariffs on Chinese goods thanks to “productive” trade talks and that he and Chinese President Xi Jinping would meet to seal a deal if progress continued.
“The suggestion from President Trump that he is planning for a summit for President Xi and himself will also raise investor excitement that a resolution to this long-standing trade conflict is nearing a conclusion,” said Jameel Ahmad, head of market research at futures brokerage FXTM.
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