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NEW YORK (Reuters) – Oil prices slipped more than 1% on Tuesday as the Suez Canal reopened to traffic and the US dollar rallied.
Investors focused on the next OPEC + ministerial meeting on Thursday, where analysts expect the group to expand supply restrictions given the weak demand outlook.
Brent crude fell 84 cents, or 1.3%, to $ 64.14 a barrel as U.S. West Texas Intermediate oil ended the session down $ 1.01, or 1.6 %, at $ 60.55 per barrel.
The benchmarks maintained their losses in post-settlement trade after industry data showed U.S. crude inventories swelled 3.9 million barrels last week, sources quoted the report as saying. American Petroleum Institute weekly. Analysts in a Reuters poll forecast construction of around 100,000 barrels.
Government data is due Wednesday at 10:30 a.m. EDT (2:30 p.m. GMT)
The ships were crossing the Suez Canal again a day after tugs refloated the container ship Ever Given, which had blocked the passage for nearly a week. The backlog of 422 ships could be cleared in 3-1 / 2 days, the channel chairman said. [nL1N2LS0PW]
“The price gains that accumulated during the Suez blockade were, as expected, short-lived and are now being wiped out with the gradual return to normal traffic,” said Rystad Energy oil markets analyst Louise Dickson.
The dollar appreciated against major currencies and hit a one-year high against the yen. A firmer greenback makes the price of oil in dollars more expensive in other currencies.
With concerns over diminishing shortages of physical supplies, the market will follow Thursday’s meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, collectively known as OPEC +. .
Saudi Arabia is ready to agree to an extension of production cuts until June and to extend its own further cuts amid the latest wave of coronavirus lockdowns, a source briefed on the matter said on Monday.
“The swing that we have seen in prices means that OPEC + will likely have to take a cautious approach again,” said ING bank. “We believe the group will likely keep production levels unchanged.”
JPMorgan believes OPEC + will largely postpone its production cuts until May, and Saudi Arabia will extend its voluntary cut for another two months until the end of June.
“We expect the alliance to start adding production in increments of 500,000 barrels per day (b / d) from June through August,” he said in a note from research.
Renewed lockdowns and vaccination issues could prevent up to 1 million bpd from picking up oil demand in 2021, Rystad Energy said.
One of the challenges of capping global supply, according to traders and analysts, is exports under the radar from OPEC member Iran to China, ignoring US and UN sanctions against Tehran.
China could receive up to 1 million bpd of Iranian crude this month, passed as crude from other origins, they said.
Additional reporting by Ahmad Ghaddar in London, Aaron Sheldrick in Tokyo; Editing by Marguerita Choy and Lisa Shumaker
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