Oil prices extend losses as OPEC+ uncertainty lingers

imageCommodities28 minutes ago (Jul 08, 2021 12:56)

© Reuters. FILE PHOTO: A 3D printed oil pump jack is seen in front of displayed Opec logo in this illustration picture, April 14, 2020. REUTERS/Dado Ruvic/Illustration/File Photo

By Shadia Nasralla

LONDON (Reuters) -Oil prices fell for a third day on Thursday amid supply uncertainty after the collapse of talks among leading producers raised the possibility of the current output agreement being abandoned.

Brent crude oil futures were down 32 cents, or 0.4%, at $73.11 a barrel by 1138 GMT and U.S. West Texas Intermediate futures were down 41 cents, or 0.5%, at $71.79. Both contracts hit their lowest in about three weeks earlier in the session.

The six-month spread, however, remains in backwardation with the front-month price higher than later months.

“This suggests that no immediate flooding of the market is anticipated,” PVM analysts said in a note.

Brent prices have fallen as much as $5 a barrel since Monday’s close after the collapse of talks between the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, collectively known as OPEC+.

Saudi Arabia refused demands from the United Arab Emirates to raise its output under the group’s pact, which has restrained supply for more than a year.

The group is maintaining nearly 6 million barrels per day (bpd) of output cuts and was expected to add to supply, but three days of meetings failed to close divisions between the Saudis and the Emiratis.

Russia is trying to mediate to help to strike a deal to raise oil output, three OPEC+ sources said on Wednesday.

Concerns over the COVID-19 pandemic also weighed on prices, with Japan, the world’s fourth-largest oil user, set to declare a state of emergency for the Tokyo area and South Korea reporting its highest daily tally of COVID-19 cases.

Prices found some support from a large drop in oil inventories in the United States.

Crude stockpiles in the world’s biggest oil user fell by 8 million barrels for the week ended July 2, two market sources said, citing American Petroleum Institute figures. [API/S]

Government inventory data is due on Thursday, pushed back a day after the U.S. Fourth of July holiday on Monday. [EIA/S]

U.S. oil production declines this year are expected to lessen, with the Energy Information Administration (EIA) saying on Wednesday that output will be 11.10 million bpd in 2021, higher than previously forecast.

Oil prices continue to fall as OPEC+ uncertainty weighs

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