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ICE August Brent was lower in US morning trading Tuesday on expectations OPEC oilproducers will soon relax production limits.
At 1326 GMT, ICE August Brent was $1.16 lower at $74.13/b. NYMEX July crude was down 40 cents at $64.35/b. NYMEX July ULSD was 2.77 cents lower at $2.1248/gal. NYMEX July RBOB was 2.31 cents lower at $2.0993/gal.
ICE August Brent touched a low of $73.81/b so far Tuesday, dipping below its Bollinger Band lower limit calculated at $74.3/b, suggesting the front-month contract may have veered into oversold territory.
The last time ICE Brent dipped below the Bollinger Band lower limit was May 8. A rally then lifted Brent to its upper limit until prices fell hard on indications Saudi Arabia and Russia were considering raising supply.
Bloomberg reported Tuesday that US government officials have asked Saudi Arabia and other OPEC producers to increase production by more than 1 million b/d, citing unnamed sources.
“Reports that the US asked Saudi Arabia to increase production are taking blame for the sell-off this morning, one of many story-lines that will be debated as the count-down to the June 22 OPEC meeting continues,” TAC Energy said in a note.
A meeting in Kuwait City over the weekend involving Gulf oil ministers failed to yield any clues on production strategy ahead the June 22 meeting in Vienna.
ICE August Brent was $9.85/b above NYMEX August crude Tuesday morning, in from $10.61/b Monday. The ICE Brent/WTI spread settled Friday at $11.02/b, its widest since February 2015.
The American Petroleum Institute will release its US stocks data later Tuesday. The Energy Information Administration releases its figures Wednesday.
US crude stocks are expected to have fallen 1.3 million barrels for the week ended June 2, according to analysts surveyed Monday by S&P Global Platts.
Analysts also expect gasoline stocks fell by 600,000 barrels, while distillate stocks likely rose by 700,000 barrels, the survey indicated.
“Strong crude demand from higher runs and increased exports will continue to reduce crude inventories in the weeks ahead,” S&P Global Platts Analytics said in a note Tuesday.
“This week’s data should show another crude stock decline, though it will be modest because of a late-month surge in imports,” it said.
–Geoffrey Craig, geoffrey.craig@spglobal.com
–Edited by Jonathan Dart, jonathan.dart@spglobal.com
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