Oil prices closed slightly lower after choppy trading on Monday, buoyed by Saudi Arabia raising its July crude prices but amid doubts that a higher production target for oil producers of OPEC+ would ease the supply shortage.
Brent crude fell 21 cents, or 0.2 percent, to settle at $119.51 a barrel after hitting an intraday high of $121.95. US West Texas Intermediate (WTI) crude futures fell 37 cents, or 0.3 percent, to settle at $118.50 a barrel after hitting a three-month high of $120.99. The benchmark index fell $1 at the beginning of the session.
Saudi Arabia raised the July Official Selling Price (OSP) for its flagship Arabian Light Crude to Asia by $2.10 from June at a $6.50 premium over Oman/Dubai quotes, just below a record high. recorded in May when prices reached highs due to concerns. of interruptions in supplies from Russia.
The price increase followed a decision last week by the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, to increase July and August output by 648,000 barrels per day, or 50 percent more than planned. previously, although global refining capacity is limited. has kept prices high.
“Crude inputs to US refineries are down about 6 percent from four years ago at this point and this reduction is associated with a need for less crude hedging while also contributing to severe tightness.” in the gasoline and diesel markets,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.
The increased target was extended to all OPEC+ members, many of which have little room to increase production and which includes Russia, which faces Western sanctions after its invasion of Ukraine in February.
“With only a handful of OPEC+ participants with spare capacity, we expect the increase in OPEC+ production to be about 160,000 barrels per day in July and 170,000 bpd in August,” JP Morgan analysts said in a note.
On Monday, Citibank and Barclays raised their price forecasts for 2022 and 2023, saying they expected Russian production and exports to fall by about 1 million to 1.5 million bpd by the end of 2022.