Oil markets trading in range amid mixed supply signals
Rising output from OPEC and perceived supply risks from Venezuela, Africa and Iran boost sentiment
Singapore: Oil prices were steady on Tuesday, capped by gradually rising output from producer club OPEC and supported by perceived supply risks from places such as Venezuela, Africa and Iran. International Brent crude oil futures were at $76.21 per barrel at 0542 GMT, unchanged from their last close. US West Texas Intermediate (WTI) crude futures were down 4 cents at $68.83 per barrel.
Traders said markets were range-bound, hemmed in by conflicting price signals.
The monitoring committee of the Organization of the Petroleum Exporting Countries (OPEC) found that oil producers participating in a supply-reduction agreement, which includes non-OPEC member Russia, cut output in July by 9% more than called for. The findings for last month compare with a compliance level of 120% for June and 147% for May, meaning participants have been steadily increasing production.
OPEC and its allies agreed in late 2016 to cut output from 2017 by around 1.8 million barrels per day (bpd) versus October 2016 levels. Concerns about an economic slowdown because of trade conflict between the United States and China also continued to weigh on global markets, traders said.
However, the International Energy Agency (IEA) on Monday warned of further supply disruptions, especially from Venezuela, where an economic crisis has cut deep into the OPEC-member’s oil output. Venezuelan crude oil exports had halved in the previous two years to just 1 million bpd by mid-2018, according to trade flow data.
“We can expect a further fall,” the IEA’s Executive Director Fatih Birol told Reuters in Norway on Monday. Birol also warned that African OPEC-members Libya and Nigeria “seem both still fragile countries” despite some recent improvements.
Birol said it was too early to gauge the impact of the US sanctions that will target Iran from November.
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