Oil Prices Mixed But Increased Output Caps Gains

Investing.com – Oil prices were mixed on Tuesday morning in Asia but remained under pressure from expectations that Saudi Arabia and Russia would pump more crude to ease a potential shortfall in supply.

 for July delivery were trading at $66.73 a barrel at 11:30PM ET (03:30 GMT), down 1.69%. for August delivery, traded in London, were up 0.36% at $75.59 per barrel.

for September delivery were up 0.15% at 465.00 yuan ($72.49) per barrel.

Investors have started pricing in the likelihood of Saudi Arabia and Russia increasing oil production, but doubt remains, with any agreement to be finalised when the Organization of the Petroleum Exporting Countries (OPEC) meet in Vienna on June 22.

Saudi Arabia, de-facto leader of OPEC, as well as Russia have discussed raising oil production in the second-half of the year by some 1 million barrels per day (bpd) to make up potential supply shortfalls from Venezuela and Iran.

This potential boost in output, along with rising oil production in the U.S., has dragged down oil prices.

OPEC as well as a group of non-OPEC producers led by Russia started withholding output in 2017 to boost oil prices and clear a supply glut. The group had agreed to curb their output by about 1.8 million bpd.

Prices have soared since the start of the cuts, with Brent breaking through $80 per barrel earlier in May. The pace of the recent rise in oil prices has sparked a debate among investors on whether this poses downside risks to global growth.

Meanwhile, there are some worries over a fall in U.S. oil demand if more Middle East crude supplies flow into the market.

U.S. crude oil production has risen by more than a quarter in the last two years, to 10.73 million bpd, inching ever closer to top producer Russia’s output of around 11 million bpd.

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