Many investors reserved profits on an eight-day rally that was generated by tentative signs that a determined rise in U.S. crude production may be slowing because oil prices fell on Tuesday. Brent crude futures LCOc1 fell by 15 cents to $49.53 per barrel by 1138 GMT and U.S. West Texas Intermediate (WTI) crude futures CLc1 were also trading down 12 cents at $46.95 a barrel. The falls came after both benchmarks recovered around 12 percent from their recent lows on June 21.
Traders said that many of the traders closed positions on July 4 ahead of the U.S. Independence Day Holiday. And Brent faced technical resistance as it approached $50 per barrel. But the market outlook has shifted.
Organization of the Petroleum Exporting Countries (OPEC) ability is doubted to hold back enough production to tighten the market in late May and most of the June because U.S. output was overwhelmingly rose.
U.S. data showed a dip in American oil output and a minor fall in drilling for new production. RIG-OL-USA-BHI C- OUT-T-EIA, so the sentiment began to shift to the end of the June.
Commerzbank said on Tuesday “The fact that prices have not come under any noticeable pressure of late points to a shift in sentiment.”
The bank added, “This may be related to the fact that most of the ‘shaky hands’ have withdrawn from the market by now.”
According to the survey of Reuters, prices rose in the current days despite OPEC production thumping a 2017 high of 32.72 million barrels a day in June. Rising production from the Libya and Nigeria are undercut by the group efforts to rebalance the market. And Libya is currently pumping around 1 million BPD of crude.
According to the report by the Thompson Reuters Oil Research, OPEC exports rose for the second month in a row in June to 25.92 million BPD, a rise of 1.9 million BPD if compared with the same month last year.
“We see a recovery for oil prices in H2 2017 from current levels, with OPEC production cuts, a slowdown in global supply growth and seasonally firming demand driving up prices,” BMI Research said, although it added that “large-volume supply additions will keep price growth flat year on year in 2018”.