Crude oil futures ease as market eyes June OPEC meeting

Crude oil futures were slightly lower during morning trade in Europe Wednesday as the market looked ahead to the June meeting of OPEC.

At 1030 am London time (1030 GMT), ICE May Brent crude futures were down 13 cents/b from Wednesday’s settle at $67.84/b, while the NYMEX May light sweet crude contract was 43 cents/b lower at $59.53/b.

“Crude oil prices are in mixed territory, equities are flat and EUR/USD is not moving either,” Michael Poulsen, senior oil risk manager at Global Risk Management, said.

“For the most part the market is on hold, we are in a waiting window,” he added.

The 24-country OPEC/non-OPEC coalition is due to meet June 25-26 in Vienna, when it will decide whether to extend the 1.2 million b/d supply cut agreement beyond June.

In the meantime, OPEC’s market monitoring committee will May 19 in Jeddah, Saudi Arabia.

Manufacturing data from Asia, Europe and the US over the last week pointed to a global economic slowdown, adding to price volatility amid tight supply.

Despite the fall in crude oil prices in London morning trade, tight supply is the key market focus, according to Commerzbank analysts.

“Thanks to over-compliance by Saudi Arabia and a number of involuntary supply outages, OPEC is keeping its oil production more heavily restricted than necessary,” Commerzbank analysts said in a note Wednesday.

A large-scale power outage in Venezuela has curbed oil exports and production since Monday. Four crude oil processing plants with a capacity of 700,000 b/d are unable to operate, while the country’s largest oil terminal is unable to operate due to the power outage, analysts said. As a result, Venezuelan crude oil exports have fallen, independent of US sanctions.

Also providing support to the market were numbers from the American Petroleum Institute late Tuesday. “Distillates and gasoline had some okay draws pushing up crude oil prices,” Poulsen said. The product draws offset a 1.9 million-barrel increase in US crude inventories.

Closely watched figures from the US Energy Information Administration will be released Wednesday.
Source: Platts