Oil prices dropped on Thursday,June 14, pressured by a strengthening dollar, rising U.S. crude production, and expectations that the Organization of the Petroleum Exporting Countries could decide to increase output at their meeting next week.
Brent crude oil LCOc1 lost 82 cents to trade at $75.92 a barrel by 11:32 a.m. (1532 GMT), while West Texas Intermediate crude CLc1 slipped 24 cents to $66.40.
Brent and WTI hit 3-1/2-year highs in May but have since drifted lower, indicating investors expect the market to soon become better supplied as U.S. crude production rises and as OPEC and its allies look poised to increase output.
“(ECB President Mario) Draghi came out a little bit more dovish than people though the was going to be. And that really caused the euro to take a dip and the (U.S.) dollar to go up, which is putting downward pressure on prices,” said Phil Flynn, analyst at Price Futures Group in Chicago.
A stronger dollar makes greenback-denominated commodities, like oil, more expensive for holders of other currencies.
Oil supply concerns have also been weighing on the market.
U.S. crude output has risen almost 30 percent in the last two years to a record high of 10.9 million barrels per day. Russia pumped 11.1 million bpd in the first two weeks of June, above Saudi Arabia, which produced slightly more than 10 million bpd.
In 2017, OPEC began supply cuts of 1.8 million bpd to support the market. But, with Brent prices up by around 180 percent from their 2016 low, global crude inventories falling, Venezuelan production plummeting and imminent sanctions against Iran, the group may soon end their supply cuts.
The alliance meets on June 22-23 in Vienna, where it is expected to come to a decision on output.
“A wait-and-see approach is taking hold across the energy complex as market participants buckle down ahead of next week’s crunch OPEC/non-OPEC meeting,” said Stephen Brennock, analyst at London brokerage PVM Oil Associates.
Russian Energy Minister Alexander Novak told reporters that members of the OPEC-plus production cut deal can consider returning up to 1.5 million bpd to the market gradually.
Saudi Energy Minister Khalid al-Falih said he expected a reasonable and moderate agreement next week when OPEC and non-OPEC oil producers meet.
Barclays said in a note that it expected the group to increase production by 700,000 to 800,000 bpd.