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Oil prices slip as U.S. and Russian supplies grow

Reuters  |  LONDON 

By Christopher Johnson

LONDON (Reuters) - prices slipped on Monday, pulled down by rising Russian production and the highest U.S. drilling activity in more than three years but supported by concerns over future Iranian and Venezuelan output.

Analysts expect higher U.S. output to offset supply curbs by the Organization of the Petroleum Exporting Countries, which have been in place for 18 months and have pushed up prices significantly over the last year.

Benchmark Brent crude was down 15 cents at $76.31 a barrel by 0915 GMT. U.S. light crude was 10 cents lower at $65.64.

The number of new rigs drilling for in the rose by one last week to 862, its highest since March 2015, data from firm showed. [RIG/U]

That implies U.S. crude output, already at a record high of 10.8 million barrels per day (bpd), will climb further.

Russian agency said on Saturday Russia's production had risen to 11.1 million bpd in early June, up from slightly below 11 million bpd for most of May, and well above its target output of under 11 million bpd.

But markets are worried by falling supply from and the potential of lower exports from

Venezuelan production is falling due to sanctions, economic crisis and mismanagement, while faces U.S. sanctions over its nuclear programme that are likely to curb exports in the next few months.

"Sentiment is caught in a tug of war between the drop in supply from and and the prospect of rising output from OPEC/non-OPEC coupled with rampant U.S. shale production," said Stephen Brennock, at brokerage

OPEC, together with some non-OPEC producers including Russia, started withholding output in 2017 to try to end a global supply glut and support prices.

"Non-OPEC supply is expected to rise sharply in 2019 led by U.S. shale growth, along with Russia, Brazil, and Kazakhstan," U.S. said, adding that it was bearish for oil in the second half of this year.

"Oil fundamentals are expected to weaken in 2019 on the back of stronger-than-expected non-OPEC supply, but also the potential release of barrels from OPEC as the joint accord between OPEC and non-OPEC is unlikely to stay in place," said in its quarterly outlook.

OPEC and its partners are due to meet on June 22-23 in

(Additional reporting by in Singapore; Editing by Dale Hudson; Editing by Dale Hudson)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Mon, June 11 2018. 16:02 IST