Oil slips after hitting highest since 2018 before OPEC+ talks
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[June 28, 2021] By
Bozorgmehr Sharafedin
LONDON (Reuters) -Oil prices slipped on
Monday after hitting more than 2-1/2 year highs earlier in the session,
as a spike in COVID-19 cases in Asia put a brake on their rally before
this week's OPEC+ meeting.
Brent was down 20 cents, or 0.3%, to $75.98 a barrel at 1040 GMT, after
climbing to $76.60, its highest since October 2018. U.S. crude was 10
cents, or 0.1%, lower at $73.95 a barrel.
But analysts said the rally had not yet run out of steam.
"With sentiment running high, market watchers say crude prices are
likely to keep rising ... Vaccination rollouts and strong summer demand
make for a potent bullish cocktail," said Stephen Brennock of oil broker
PVM.
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Oil prices rose for a fifth week last week as fuel demand rebounded on
strong economic growth and increased travel during the northern
hemisphere summer, while crude supplies were tight as the Organization
of the Petroleum Exporting Countries and its allies, a group known as
OPEC+, maintained production cuts.
OPEC+ is gradually easing those curbs, adding 2.1 million barrels per
day (bpd) to the market from May to July. OPEC+, which meets on July 1,
could decide to add further barrels in August as oil prices rise with
recovering demand.
ANZ and ING expect OPEC+ to increase output by about 500,000 bpd in
August, which is likely to support higher prices.
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Pump jacks operate at sunset in Midland, Texas, U.S., February 11,
2019. Picture taken February 11, 2019. REUTERS/Nick Oxford/File
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Rising COVID-19 cases in Asia have however put a modest dampener on the outlook.
Indonesia is battling record-high cases, Malaysia is set to extend a lockdown
and Thailand has announced new COVID-related restrictions.
Australia also reported on Sunday one of the highest numbers of locally acquired
coronavirus cases this year, triggering lockdowns in some cities.
Iran and the United States are expected to resume indirect talks on reviving a
pact over Tehran's nuclear work.
Agreement could lead to a lifting of U.S. sanctions and more Iranian crude on
the market. But tensions rose after U.S. air strikes on Sunday against
Iran-backed militias in Iraq and Syria.
"We do not currently expect Iranian exports to return anytime soon, in other
words, so OPEC+ should have free rein at its meeting," said Commerzbank analyst
Eugen Weinberg.
(Reporting by Bozorgmehr Sharafedin in London; Additional reporting by Florence
Tan; Editing by Christopher Cushing, Kenneth Maxwell and Jan Harvey)
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