Brent crude prices fell Tuesday on rising output from the Middle East and ahead of an OPEC meeting this week, while U.S. crude edged higher as the summer driving season began.
Brent crude oil futures were down 40 cents at $49.36 a barrel by 0839 GMT, while U.S. West Texas Intermediate (WTI) crude oil futures traded 10 cents higher at $49.43 a barrel.
Iraq will supply 5 million barrels of extra crude to its international oil company partners in June, industry sources familiar with the issue said, joining other Middle East producers by lifting market share.
Iraq, the second-largest producer in the Organization of the Petroleum Exporting Countries, had already been targeting record crude export volumes from southern terminals next month of 3.47 million barrels per day.
Asian imports of Iranian oil rose more than 13 percent in April from a year before as Tehran vies to recoup market share lost under international sanctions.
Saudi Arabia, the world’s top crude exporter, and fellow OPEC producers Iran, Kuwait and the United Arab Emirates also plan to raise supplies in the third quarter.
OPEC’s 13 members meet in Vienna Thursday to set the group’s policy, which is more focused on market share than on influencing prices.
“Anyone betting on a surprise outcome in Thursday’s meeting is brave in doing so,” Vienna-based JBC Energy said in a note Tuesday.
JBC said that with oil prices trading near $50 a barrel and improving market sentiment on unplanned outages and expectations of draws on crude inventories in the second half of the year, OPEC is under less pressure to act.
“But of course, as with any base case assumption and with a new Saudi oil minister in town, there are alternative scenarios imaginable,” JBC said.
Demand in North America is set to pick up as the summer driving season boosts demand, triggering a cut in the amount of open short crude positions that would profit from falling prices.
The number of outstanding managed short crude positions of U.S. WTI crude futures on NYMEX fell last week to the lowest level this year.
“Since the start of the rally back in February ... speculative length on the NYMEX have been growing by 0.6 percent per week, whereas speculative shorts have been falling by 8 percent per week,” the U.S.-based Schork Report said in a note to clients.