Oil falls on the agreement of OPEC to increase production, but markets remain tense

SINGAPORE (Reuters) – The price of a barrel of Brent fell by more than 1.5% on Monday as traders take into account an increase in output expected Friday in Vienna at the headquarters of the Organization of Petroleum Exporting Countries ( OPEC).

Despite this, analysts said the global oil markets are likely to remain relatively tense this year.

Brent LCoC1 futures were $ 74.22 per barrel at 0455 GMT, down 1.8% from their last close.

US West Texas Intermediate (WTI) CLc1 crude futures were $ 68.42 a barrel, down 0.2%, supported more than Brent by a slight decline in drilling activity in the United States and a supply outage in Canada.

Prices first jumped after the announcement of the OPEC agreement at the end of last week as we did not see the supply increase as much as some of the prices. They had planned.

OPEC member countries and non-OPEC countries, including Russia, have reduced their production by 1.8 million barrels per day (bpd) since 2017 to tighten the market and support the prices.

Largely because of unforeseen disruptions in places like Venezuela and Angola, the group's output has been lower than targeted reductions, which will now be offset by increases in supply, particularly from of OPEC in Saudi Arabia. Although analysts warn that there is little space capacity for large-scale production increases.

"Saturday's OPEC + press conference brought more clarity on the decision to increase production, with forecasts for an increase of 1 million bpd at 2:18," Goldman Sachs said in a statement. a note on Sunday.

"This is a bigger increase than the one presented on Friday, although the goal remains to stabilize stocks, not to generate a surplus," the US bank added.

Edward Bell, a commodities analyst at Emirates NBD Bank in Dubai, said "any increase in production would be borne most significantly by Saudi Arabia, the UAE and Kuwait".

Taking into account the Vienna agreement on the market, Bell said he expected the prices "to be between 65 and 70 dollars a barrel for Brent for the rest of the year." 39; year. "

In the United States, US energy companies first cut an oil rig last week, the first reduction in 12 weeks, lowering the total number of platforms to 862, Baker Hughes (GE.N) said Friday.

This allowed the platform to count on its lowest monthly gain since it dropped by two devices in March, with only three devices added in June. However, the overall level remains below the March 2015 peak compared to the previous week.

Goldman Sachs also warned that a "failure at Syncrude Canada's oil sands plant could cause North America to miss 360,000 b / d of supply." for the whole month of July ".

He added that this "will exacerbate the current global deficit, making the increase in OPEC production all the more necessary".