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Oil Dips On News of Increased Supply

June 11, 2018 at 15:29 by Matt Jackson

News of increased supply has pushed Brent crude prices down, although the market still seems to be waiting for the OPEC meeting on June 22 before it makes any major moves, as WTI crude remains stable.

On Friday, Baker Hughes reported that there had been an increase in US oil rigs. There are now 1,062 operational rigs, which represents an increase of 135 compared to the same period last year. US oil production has risen for 15 consecutive weeks, helping to keep prices down.

It has also emerged that Russia has increased its oil supply, producing 11.09 million barrels per day in the first week of June. This news comes as OPEC nations, and Russia, prepare for their meeting on June 22, where the group is expected to discuss the possibility of increasing their supply. OPEC nations are currently curbing their production in a bid to try and push oil prices up. However, US President, Donald Trump, has unofficially asked the group to increase supply again. The latest reports suggest that they will agree to produce more oil, and a number of Russian oil companies have suggested that they would be happier to increase output, rather than continue to curb production in the hope of higher oil prices. Rosneft and Gazprom Neft, which are two of the country’s largest producers, have said that they are ready to ramp up supply if asked.

OPEC nations are, apparently, undecided on whether to increase supply or leave it at current levels. Many members, especially including Iran and Venezuela, are upset that the cartel is expected to meet the shortfall of supply that is likely to be caused by sanctions against two of their own members. Saudi Arabia’s willingness to deal with the USA has angered some members, who may look to prevent an increase in supply. It has emerged that the request was made the day prior to the USA announcing that they would withdraw from the Iran nuclear deal.

While it is widely believed that countries like Saudi Arabia will increase supply, it is therefore far from certain that this will be the final outcome.

WTI crude prices have remained flat at $65.74 per barrel, while Brent crude prices fell 0.47% to $76.10 at 16:15 GMT.

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