Oil Edges Up Ahead of OPEC Market Report

Oil Edges Up Ahead of OPEC Market Report

Benchmark Brent crude LCOc1 was down 65 cents at $75,81 a barrel by 1330 GMT.

The Organization of the Petroleum Exporting Countries (OPEC) released its monthly report on Tuesday, and the group cited a high degree of uncertainty hanging over the global oil market.

The market hit its low for the session and turned higher after Iraq's oil minister said producers should not be influenced by pressure to pump more oil. OPEC responded to the last bear market by cutting output to help balance the supply glut.

Various sources show that "considerable uncertainty as to world oil demand and non-OPEC supply prevails", OPEC said, leading to a wide range of estimates for the remainder of 2018.

These developments are setting the stage for a tense meeting later this month at which OPEC and allies are expected to discuss reversing some of the cuts to offset potential supply disruptions.

"Early in the session, prices fell in response to a bearish report from JPMorgan on Friday that said, 'Non-OPEC supply is expected to rise sharply in 2019, led by USA shale growth, along with Russia, Brazil, Canada and Kazakhstan".

Beyond changes in the supply-side, strong demand has been supportive of oil prices.

OPEC kingpin Saudi Arabia in January publicly floated the idea to extend the cooperation agreement which was struck by 24 OPEC and non-OPEC producers in late 2016 to trim output to shore up prices.

There are already a lot of signs pointing towards a tough June 22 OPEC+ meeting, with Russian Federation and Saudi Arabia clearly in favor of higher production and Iraq and Iran clearly opposed to it. Iraq is not really in a good position to oppose the raise, however.

Oil had some support thanks to gains in the equities market, analysts said.

We continue to expect a two-sided trade as investors prepare for the OPEC meeting in Vienna on June 22.

Production fell in Nigeria, Libya and Venezuela, but increased in Saudi Arabia, Algeria and Iraq.

Saudi Arabia, which along with Russian Federation is trying to garner support for lifting output limits, told the Organisation of Petroleum Exporting Countries that its daily production rose 162,000 barrels a day to 10.030 million in May compared with the previous month, a person with knowledge of the data said, asking not to be identified because the information isn't public.

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