Oil dips slightly lower as OPEC+ discusses increasing production

NEW YORK (Reuters) – Crude oil prices came in slightly lower Tuesday after Brent surged above $75 a barrel for the first time in more than two years as OPEC+ discussed increasing oil production.

Brent oil futures fell 9 cents to $74.81 a barrel after a session high of $75.30 a barrel, the strongest since April 25, 2019.

US West Texas Intermediate (WTI) crude fell 60 cents, or 0.8%, to $73.06 a barrel.

OPEC+ is discussing a gradual increase in oil production from August, but the exact volumes have not yet been decided, an OPEC+ source said Tuesday. [nL2N2O40JQ]

The Organization of the Petroleum Exporting Countries (OPEC) and allies, collectively known as OPEC+, are already returning 2.1 million barrels per day (bpd) to the market from May to July as part of a plan to phase out last year’s record production restrictions to settle as pandemic-affected demand recovers.

The group will meet again on July 1.

Both benchmarks have risen over the past four weeks in response to the global rollout of COVID-19 vaccinations and an expected increase in summer travel.

(Because) because of the tight physical markets and healthy demand perception, risk remains skewed, oil broker PVM said.

BofA Global Research raised its forecasts for the price of Brent oil for this year and next, saying that tighter oil supply and recovering demand could push oil to $100 a barrel in 2022 for a short time.

The heads of top energy companies said on Tuesday at the Qatar Economic Forum that while benchmark oil prices could reach $100 a barrel, price volatility could also increase due to lower investment and the energy transition.

There are a lot of people talking about $100 crude and that’s driving the market, said Bob Yawger, Mizuho’s director of energy futures.

Bernard Looney, Chief Executive of BP, told Reuters on Tuesday that there is a very high probability that high price levels will be maintained for years to come, and if they do, it will be very good for our strategy. [nL2N2O40UH]

Negotiations to revive Iran’s nuclear deal were interrupted on Sunday after hard judge Ebrahim Raisi won the country’s presidential election.

Raisi on Monday supported talks between Iran and six world powers to revive a 2015 nuclear deal but flatly rejected the meeting with US President Joe Biden even if Washington lifted all sanctions.

US crude inventories were expected to fall for the fifth consecutive week last week, with both distillate and gasoline inventories rising, a preliminary Reuters poll showed Monday.