London — Crude futures fell sharply in European trading on Monday morning, as signals of rising output from the US and OPEC members offset a string of supply strains, including a strike at Norwegian oil fields and a kidnapping at the Sharara field in Libya.
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At 1130 GMT, September ICE Brent was down $1.45 from Friday's settle at $73.88/b, while the August NYMEX crude price was down $1.32 to $69.69/b.
That dip comes amid signals that overall supplies could rise, with the US heard to be mulling tapping into stockpiles over the summer months, alongside larger offers of crude from Saudi Arabia and higher Russian output.
Reports over the weekend suggested that the Trump administration is considering releasing additional supplies to prevent price spikes, while Saudi Arabia was heard to be offering larger volumes to customers in Asia who have pulled back sharply on Iranian imports. Russian officials have also said they will bring 200,000 b/d of additional product back into the market for June as production cuts ease.
"Over the weekend there were a string of supply-side developments that would have been supportive," said Harry Tchilinguirian at BNP Paribas in London, from disruptions in Libya and Norway to longer-running supply threats including Iranian sanctions and the decline of Venezuelan output.
"However, all these elements are trumped by the fact that the US may be thinking of tapping into the US [Strategic Petroleum Reserve] over the summer, with the view of preventing any price spikes."
Meanwhile, strikes on Norwegian oil and gas rigs by unions were expected to dramatically expand over the course of Monday, extending last week's strike of 669 workers on offshore rigs, over pay disputes. That closed the Knarr field, operated by Shell.
That was not expected to have an immediate impact on output, but could eventually dent total output if the strike continues.
Over the weekend, production at Libya's largest oil field dropped by almost half following a kidnapping of four workers, according to the state-owned National Oil Corporation. That was at the Sharara oil field in the country's southwest region, which as an output of about 340,000 b/d and is jointly controlled by Total, Repsol, Statoil and OMV.
The field has been plagued by closures in recent years. That came on the heels of a force majeure declared at Libya's 90,000 b/d El-Feel oil field, which was only ended on Thursday.
Looking forward, market participants were awaiting an OPEC Joint Monitoring Committee meeting on Wednesday at Vienna, which is expected to bring debate on the shift from tracking output quotas for individual producers to tracking output for the bloc collectively, a move that Iran has resisted.
Officials there have argued that the accord could be breached if individual countries exceed their own specific caps.
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