Brent crude prices fell on Tuesday on rising output from the Middle East and ahead of an OPEC meeting on Thursday, while U.S. crude edged higher as the summer driving season began.
Continue Reading Below
Brent crude oil futures were down 26 cents at $49.50 a barrel by 1056 GMT (6.56 a.m. ET), while U.S. West Texas Intermediate (WTI) crude oil futures traded 9 cents higher at $49.42 a barrel.
Iraq will supply 5 million barrels of extra crude to its international oil company partners in June, industry sources familiar with the issue said, joining other Middle East producers by lifting market share.
Iraq, the second-largest producer in the Organization of the Petroleum Exporting Countries, had already been targeting record crude export volumes from southern terminals next month of 3.47 million barrels per day.
Asian imports of Iranian oil rose more than 13 percent in April from a year before as Tehran vies to recoup market share lost under international sanctions.
OPEC's 13 members will meet in Vienna to set the group's policy, which is expected to focus more on market share than on influencing prices.
Continue Reading Below
"Anyone betting on a surprise outcome in Thursday’s meeting is brave in doing so," Vienna-based JBC Energy said in a note on Tuesday.
JBC said that with oil prices trading near $50 a barrel and improving market sentiment on unplanned outages and expectations of draws on crude inventories in the second half of the year, OPEC is under less pressure to act.
"But of course, as with any base case assumption and with a new Saudi oil minister in town, there are alternative scenarios imaginable," JBC said.
One topic on the group's agenda is selecting a new secretary-general to replace Abdullah al-Badri, with Nigeria's Mohammed Barkindo emerging as a front-runner, sources tell Reuters.
Demand in North America is set to pick up as the summer driving season boosts demand, triggering a cut in the amount of open short crude positions that would profit from falling prices.
The number of outstanding managed short crude positions of U.S. WTI crude futures on NYMEX fell last week to the lowest level this year.
"Since the start of the rally back in February ... speculative length on the NYMEX have been growing by 0.6 percent per week, whereas speculative shorts have been falling by 8 percent per week," the U.S.-based Schork Report said in a note to clients.
(Additional reporting by Henning Gloystein in Singapore; Editing by David Holmes and William Hardy)