Oil prices halted their rally yesterday with Brent futures falling below $71 per barrel on signals that Russia may exit production cuts.
Losses were limited by a tightening of global supplies, as output has fallen in Iran and Venezuela amid signs the United States will further toughen sanctions on those two OPEC producers.
Brent crude futures were at $71,15 a barrel at 1330 GMT, down 40 cents, or 0,60 percent, having earlier slid below $71 per barrel. Brent hit its highest since November 12 on Friday at $71,87.
US West Texas Intermediate crude futures were at $63,49 per barrel, down 40 cents or 0,66 percent.
“I would expect oil to trade in a relatively tight band around $70 for the time being,” said Virendra Chauhan, oil analyst at Energy Aspects in Singapore, pointing to differing signs from the United States and OPEC on future supply.
“Leading edge indicators on US supply suggest activity levels are stepping up, which is supportive for strong production growth in the second half,” Chauhan said.
But at the same time, “murmurings from various ministers of the OPEC+ pact suggest supply from the group will not be ramped up pre-emptively as per last summer,” he said.
The Organisation of the Petroleum Exporting Countries and its allies meet in June to decide whether to continue withholding supply. OPEC, Russia and other producers are reducing output by 1,2 million barrels per day from January 1 for six months.
OPEC’s de facto leader, Saudi Arabia, is considered keen to keep cutting, but sources within the group said it could raise output from July if disruptions continue elsewhere.