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The
Organization of the Petroleum Exporting Countries and allies,
known as OPEC+, agreed on Thursday to monthly production hikes
from May to July. Iran is also boosting supply. [OPEC/O]
Brent crude for June fell 96 cents, or 1.5%, to $63.90 a barrel
by 0905 GMT. U.S. West Texas Intermediate crude for May dropped
62 cents, or 1%, to $60.83.
"The OPEC+ decision, perhaps nudged along by increasing Iranian
production heading to China, probably means we have seen the
best of the oil rally now for the next few months," said Jeffrey
Halley of brokerage OANDA.
Oil has recovered from historic lows last year due to record
OPEC+ cuts, most of which will still remain after July, and some
oil demand recovery that is expected to gather pace in the
second half of the year.
While a slow vaccine rollout and return to lockdown in parts of
Europe have weighed on the rebound, figures on Friday showed the
U.S. economy created the most jobs in seven months in March,
with all industries adding jobs.
"The seemingly invincible accelerating U.S. recovery has offset
OPEC+'s announcement on Thursday," Halley said.
In another development that could eventually lead to more
supply, investors are focused on indirect talks between Iran and
the United States as part of negotiations to revive the 2015
nuclear deal between Tehran and global powers.
Eurasia analyst Henry Rome said he expected U.S. sanctions,
including restrictions on Iranian oil sales, to be lifted only
after these talks are completed and Iran returns to compliance.
Iran has already boosted exports to China despite the sanctions.
(Additional reporting by Florence Tan; Editing by Andrew
Cawthorne)
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