Brent continues downward trend as supply concerns ease

The front-month ICE Brent contract has inched lower by $0.25/bbl on the day, to trade at $83.34/bbl at 09.00 GMT.

PHOTO: Getty Images

Upward pressure:

Brent futures continued to draw support from the supply cuts announced by Saudi Arabia-led oil-producer group OPEC+. Earlier this month, Saudi Arabia and Russia announced an extension of their voluntary production cuts into September.

“Saudi Arabia is so confident in the global demand outlook that they took steps of not only extending its lollipop 1.0 million barrel a day production cut [to include September] but also raised its selling price for its oil to Europe,” said Price Futures Group’s senior market analyst Phil Flynn.

“The cut could be extended or extended and deepened depending I guess, on their mood” he added in a note.

Downward pressure:

Downward pressures acting on the Brent price include easing of concerns about tight global supply.

Iran’s crude oil output will increase to 3.4 million b/d by the end of September from the current production level of 3.3 million b/d, the country's state media agency IRNA reported quoting Iran's oil minister Javad Owji as saying.

Additionally, the US government is drafting a proposal to ease sanctions on Venezuelan oil exports, allowing more US companies to buy crude from Venezuela, Reuters reported.

“Oil also sold off on hopes of a positive conclusion of talks between Iraq and Turkey to discuss several issues including the resumption of oil exports through the Ceyhan pipeline in the Turkish Mediterranean,” added Phil Flynn.

By Aparupa Mazumder

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