By Jessica Resnick-Ault
Brent crude futures
In the past three weeks, prices have declined from three-year highs as the market has contended with supply concerns. On Friday, oil prices came under pressure after data suggested Chinese demand was waning and concerns lingered about growing U.S. output.
Hedge funds and other money managers cut their bullish bets on U.S. crude futures in the week ended June 5, the U.S. Commodity Futures Trading Commission (CFTC) said.
JP Morgan cut its 2018 crude forecast for WTI by $3 to $62.20 a barrel. The bank said geopolitical tensions and lingering risks of supply disruptions may push prices higher during the second half 2018, it expects prices will head lower late in the year, and remain capped in 2019.
The futures contracts dipped after the forecast was issued, and then pared losses.
May shipments were 39.05 million tonnes, or 9.2 million barrels per day (bpd). That compared with 9.6 million bpd in April.
Further weighing on prices has been rising U.S. output
U.S. drillers added one oil rig in the week to June 8, bringing the total count to 862, the highest level since March 2015, General Electric Co's Baker Hughes energy services firm said in its closely followed report.
The surge in U.S. production has pulled down WTI into a discount versus Brent
MARKET STILL TIGHT
Despite Friday's decline, Brent remains more than 15 percent above its level at the start of the year.
U.S. investment bank Jefferies said the crude market is tight and spare capacity could dwindle to 2 percent of demand in the second half of 2018, its lowest level since at least 1984.
Markets have been tightened by supply trouble in Venezuela, where state-owned oil company PDVSA is struggling to clear a backlog of about 24 million barrels of crude waiting to be shipped to customers.
More generally, Brent has been pushed up by the voluntary production cuts put in place last year, led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia.
OPEC and Russia meet on June 22/23 to discuss production policy.
"I think it is going to be very choppy," he said.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)