Washington — Oil futures were lower Tuesday morning in US trading after data showed Saudi Arabian crude output rose last month to its highest level since October 2017.
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At 1308 GMT, ICE August Brent crude futures were 46 cents lower at $76/b. At the same time, NYMEX July crude was 6 cents lower at $66.04/b. NYMEX July ULSD was down 78 points at $2.1529/gal, while NYMEX July RBOB was 1.4 cents lower at $2.0909/gal.
Saudi Arabia produced 10.03 million b/d of crude in May, up 160,000 b/d from April, according to self-reported figures released Tuesday by OPEC in its monthly oil market report.
That was still within Saudi Arabia's quota of 10.06 million b/d under the OPEC-led production cut agreement.
Domestic oil demand in the kingdom tends to rises in the summer because power plants burning oil will run harder to meet air-conditioning needs.
Still, signs of increased Saudi output come at a sensitive time for the oil market ahead of the June 22 meeting in Vienna that will bring together the coalition from OPEC and outside OPEC participating in the supply cut deal.
Saudi Arabia and Russia, the main non-OPEC participant in the deal, have indicated they would like to pump more barrels. That position has drawn opposition from Iran, Iraq and Venezuela.
The possibility that the OPEC/non-OPEC coalition will move to relax output limits at the June 22 gathering helped pull oil prices off three-year highs reached in late May.
With ICE Brent topping $80/b, pressure began to mount on Saudi Arabia and Russia to shift strategy away away from production restraints, particularly in light of the turmoil in Venezuela taking supply off the market.
If OPEC members were to maintain its May production level, then demand would exceed the bloc's supply by 1.47 million b/d in the second half of 2018, OPEC analysts said Tuesday in the report.
"I think you could see a bit of a waiting game until the OPEC meeting," said George Wilkes, an analyst at Sucden in London. "Everyone is a bit tentative and keeping their cards quite close to their chests."
Attention will turn Tuesday evening to weekly US inventory data released by the American Petroleum Institute. The Energy Information Administration releases its own report Wednesday.
Analysts surveyed Monday by S&P Global Platts expect crude stocks to have fallen by 2.6 million barrels, while gasoline stocks were expected to build by 200,000 barrels. Distillate stocks were likely unchanged.