Oil has fallen ahead of a possible increase in OPEC crude supply, and as an escalating trade dispute between the United States and China unleashed sharp selloffs in many global markets.
Brent crude futures slipped 26 cents to settle at $US75.08 a barrel, while US West Texas Intermediate crude futures fell 78 cents, or 1.2 per cent, to settle at $US65.07 a barrel.
Russia plans to propose increasing oil production by the OPEC+ deal members by 1.5 million barrels per day, Energy Minister Alexander Novak told reporters, days ahead his visit to Vienna for the related summit.
‘This renewed commentary by Novak that they’re looking for 1.5 million bpd of production is putting downward pressure on prices in a significant manner.
The Organization of the Petroleum Exporting Countries and allies, which have curbed supplies since 2017, meet on Friday in Vienna, where they had been expected to come to a decision as to whether to increase global oil production, and by how much.
Iran, however, said OPEC was unlikely to reach a deal on oil output this week, setting the stage for a clash with Saudi Arabia and Russia, which are pushing to raise production steeply from July to meet growing global demand.
Escalating trade tensions between the US and China were also weighing on global markets including oil, said John Kilduff, partner at energy hedge fund Again Capital LLC in New York.
The two countries are threatening punitive tariffs on each other’s exports, which could include oil. China’s imports of US oil have surged since 2017 to a value of almost $US1 billion per month.
Chinese stocks fell to their lowest in almost a year, while in the United States, all three major stock indexes were down, with the Dow Jones Industrial Average erasing its gains for the year.
‘WTI is more vulnerable to spillover from today’s hard selloff in global equities than is Brent as the differential between the two benchmarks has stretched back to above $US10 per barrel,’ Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, said in a note.
Meanwhile, US crude stockpiles fell more than expected last week, while petrol and distillate inventories built, industry group the American Petroleum Institute said late Tuesday, ahead of the government’s report on Wednesday at 10.30 am (0030 Thursday AEST).
Crude inventories fell 3 million barrels in the week to June 15 to 430.6 million, compared with analysts’ expectations for a decrease of 1.9 million barrels.