Oil futures were little changed in New York, trading near $44 a barrel following a report that Saudi Arabia exceeded its agreed-upon output limits last month.
The world’s biggest oil exporter told OPEC it raised output by 190,000 barrels a day to 10.07 million in June, a person familiar with the matter said, higher than 10.058 million limit set last year. OPEC needs to deliver some “shock and awe” to the oil market for prices to rise, Goldman Sachs Group Inc. said.
“It’s sort of wait-and-see until the next set of data is released,” Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London, said by telephone. The Saudi production increase was probably just a normal seasonal adjustment, he said.
Oil has traded below $50 a barrel since May amid concern that rising global supplies will offset curbs by the Organization of Petroleum Exporting Countries and its partners including Russia. US crude inventories remain more than 100 million barrels above the five-year average and the oil rig count is at the highest level since April 2015. Increases from Libya and Nigeria are also diluting the impact of supply curbs.
“The market right now is questioning the efficacy of OPEC’s supply cuts,” Tchilinguirian said. While the fact that Saudi Arabia is producing above its target is not seen as a positive sign, "if you put it in the seasonal context, people understand that Saudi Arabia typically raises production over the summer”.
West Texas Intermediate for August delivery rose 8 cents to $44.48 a barrel at 9.58am on the New York Mercantile Exchange. Total volume traded was about 40 percent above the 100-day average. The contract climbed 17 cents to $44.40 on Monday, advancing after a weekly loss.
Brent for September settlement added 7 cents to $46.95 a barrel on the London-based ICE Futures Europe exchange, after rising 17 cents to $46.88 on Monday. The global benchmark crude traded at a premium of $2.29 to September WTI.
Oil may slip below $40 a barrel unless there are sustained inventory declines and a drop in the rig count, while evidence of further OPEC actions could help prices rally, Damien Courvalin, an analyst at Goldman, said in a note dated July 10.
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