Oil prices slid today, weighed by possible rise in OPEC’s production, unseen from 2016, due to worries of supply disruptions from Venezuela and Iran, and as an unexpected upswing in U.S. crude inventories cast doubt about seasonal demand.
Brent futures moved lower by 59 cents to $79.21 per barrel. WTI futures dropped by 41 cents to $71.43 for a barrel.
The talks of potential hike in OPEC’s output after the next month’s gathering has anchored the prices of oil for some time, therefore $80 becomes a challenge, says Carsten Fritsch of Commerzbank. In case prices go beyond that mark, it will lift the probability of certain actions from OPEC even higher, though it will be difficult to exceed that level for a significant period before the OPEC gathering, he also said.
The Organization’s decision in June may be to extract more oil in order to compensate for supply drop from Venezuela and Iran and as a reaction to concerns from the U.S. connected to climbing oil prices, people familiar with the OPEC situation told Reuters.
Brent and WTI were driven to their highest in several years by concerns over supply from Venezuela and Iran after reimposed U.S. sanctions, while Brent soared above $80 in the previous week, the first instance since the end of 2014.