Oil rises to $76 as OPEC sees production increasing
Slowing growth in American crude production, likely breakthrough in US-Mexican trade standoff add to gains
London: Brent oil prices rose to near $76 a barrel on Monday as a committee monitoring a deal on oil output curbs between OPEC and non-OPEC producers saw production rising while a U.S.-China trade dispute capped gains. International Brent crude oil futures were at $76.04 per barrel at 1326 GMT, up 22 cents from their last close.
US West Texas Intermediate (WTI) crude futures were up 13 cents at $68.85 a barrel.
Trading activity was limited due to a public holiday in Britain, traders said.
Members of an OPEC and non-OPEC monitoring committee found producers in a supply-reduction agreement cut their July output by 9% more than called for in their pact, two sources familiar with the matter said on Monday. The Organization of the Petroleum Exporting Countries and other producers led by Russia agreed in June to return to 100 percent compliance with oil output cuts that began in January 2017.
This follows months of underproduction by Venezuela and other producers which cut output by 160 percent of the agreed target. The July findings compare with a compliance level of 120 percent for June and 147 percent for May, meaning participants have been steadily increasing production.
The committee groups Saudi Arabia, Russia, the United Arab Emirates, Kuwait, Algeria, Venezuela and Oman.
The oil market is expected to tighten when U.S. sanctions targeting OPEC member Iran’s oil exports kick in in November. Iran has exported around 2.5 million barrels per day of crude oil so far this year. Most analysts expect this figure to fall by at least 1 million bpd.
“Falling US rig counts and last week’s decline in US inventories are supporting oil prices amid a protracted US-China trade war that could dampen global growth and weigh on oil demand,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage OANDA in Singapore.
US energy companies cut nine oil drilling rigs last week, taking the total to 860, the biggest reduction since May 2016, energy services firm Baker Hughes said on Friday.
Hedge funds and other money managers cut their net long, or bullish, WTI futures and options positions in the week to August 21, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday. The speculator group cut their long positions by 15,723 contracts to 341,132 during the period. Investors also cut their bullish Brent crude net long positions by 11,985 contracts to 324,431 over the same period.
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