- Increase in COVID cases in Indonesia, Malaysia, Thailand and Australia
- OPEC and allied producers to meet on July 1
- OPEC + could increase production in August, analysts say
- Abu Dhabi to cut crude supply to Asian futures buyers
- Russian oil production has declined so far in June
SINGAPORE, June 28 (Reuters) – Oil prices fell nearly 2% on Monday after hitting their highest since 2018 earlier in the session, as COVID-19 cases spike in Asia and Europe held back the recovery ahead of this week’s OPEC + meeting. .
Brent futures fell $ 1.33, or 1.8%, to $ 74.85 a barrel at 12:44 a.m. EDT (4:44 p.m. GMT), while U.S. crude West Texas Intermediate (WTI ) fell $ 1.06, or 1.4%, to $ 72.99.
These declines pushed both contracts out of overbought territory. Earlier in the volatile session, both benchmarks hit their highest level since October 2018.
“Forecasts of a recovery in demand for oil over the summer may be a bit overestimated, and traders face a reality check this week as the Delta variant (COVID-19) reaches Europe and that an increase in infections in Southeast Asia and Australia brings back the bottlenecks, ”said Louise Dickson, oil markets analyst at Rystad Energy.
Indonesia is grappling with record cases, Malaysia is set to extend lockdown, and Thailand has announced new restrictions. Read more
Australia also reported on Sunday one of the largest numbers of locally acquired coronavirus cases this year, triggering lockdowns in some cities. Read more
All eyes will be on the Organization of the Petroleum Exporting Countries and its allies this week, a group known as OPEC +, to see what happens at their meeting on Thursday.
OPEC + was returning 2.1 million barrels per day (bpd) of oil supply to the market from May to July after cutting production during the pandemic, and may decide to add more barrels in August after Crude prices rose last week for a fifth straight week as demand picked up. Read more
OPEC forecasts point to an oil supply shortfall in August and the rest of 2021 as economies recover from the pandemic, suggesting that OPEC + has an opportunity to increase production. Read more
Analysts at Australian bank ANZ and Dutch bank ING said they expected OPEC + to increase production by around 500,000 bpd in August.
But in a move that surprised some market watchers, Abu Dhabi National Oil Co (ADNOC) will cut the volume of crude it supplies to Asian futures buyers by 15% in September, according to six sources with direct knowledge of the matter. It was not immediately clear why ADNOC would cut supplies. Read more
And in Russia, oil production has fallen so far in June from average levels in May despite a rebound in oil market prices and an easing of OPEC + production cuts, two told Reuters on Monday. sources close to the data.
Iran and the United States, meanwhile, were due to resume indirect talks on relaunching a 2015 pact on Tehran’s nuclear works.
The deal could lead to a lifting of US sanctions and more Iranian crude on the market. But tensions rose after U.S. airstrikes on Sunday against Iranian-backed militias in Iraq and Syria. Iraq and Syria condemned the unilateral US strikes as violations of their sovereignty. Read more [nL2N2OA1EZ]
Iran said on Monday it had not yet decided whether or not to extend a monitoring agreement with the UN nuclear watchdog, which expired last week. Read more
Reporting by Florence Tan; Editing by Christopher Cushing
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