Oil Prices Dip On Growing Supplies

Investing.com – Oil prices edged down on Wednesday morning in Asia as expectations that Saudi Arabia and Russia will pump more crude weighed on the market.

for July delivery were trading at $66.46 a barrel at 11:00PM ET (03:00 GMT), down 0.40%. futures for August delivery, traded in London, were down 0.65% at $75 per barrel.

Shanghai crude oil futures for September delivery were down 0.54% at 460.20 yuan ($71.59) per barrel.

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

U.S. sanctions against Iran, which produces 4% of global oil supplies, will likely cause shortages later this year when trade restrictions take effect. Production in Venezuela has also plunged to its lowest level in decades due to its ongoing economic crisis.

OPEC is due to meet in Vienna on June 22 to come up with a plan to counter the shortfalls. This could mean an early exit from the agreement to curb oil production, which OPEC as well as a group of non-OPEC producers led by Russia started in 2017 to boost oil prices and clear a supply glut.

Investors have started pricing in the likelihood of increased oil production. Rising production in the U.S., which shows no sign of abating, has also dragged down prices.

production has risen relentlessly 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.

Meanwhile, a stronger U.S. dollar makes greenback-denominated oil more expensive for holders of other currencies.

Oil prices got some support as U.S. crude inventories likely fell by 1.8 million barrels last week. There are also worries over a fall in U.S. oil demand if more Middle East crude supplies flow into the market.

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