Crude-oil prices traded lower early Friday, giving up some of the ground made in a recent rally spurred by supply concerns in Venezuela and Iran.
U.S. benchmark West Texas Intermediate crude for July delivery
fell 33 cents, or 0.5%, at $65.61 a barrel on the New York Mercantile Exchange. August Brent crude
the global benchmark, shed 61 cents, or 0.8%, at $76.71 a barrel on the ICE Futures Europe exchange.
For the week, WTI is on track for a decline of 0.3%, while the international benchmark is on pace to end the week near break-even levels.
The economic crisis in Venezuela is curtailing the country’s oil production, while the planned reinstatement of U.S. sanctions against Iran is expected to hit production from the third-largest member of the Organization of the Petroleum Exporting Countries.
Energy traders and investors also are awaiting a key meeting of OPEC set June 22 to discuss the outlook for their deal to cut supplies, with a report earlier this week that the U.S. has requested that the oil cartel lift production by 1 million barrels to tamp down what has been a mostly strong rally in crude prices since late 2017.
“Crude oil [is] looking for direction from OPEC headlines ahead of the June 22 meeting,” wrote Robert Yawger, director at Mizuho Securities USA in a Friday research note.
“As it stands, the U.S. has asked OPEC to add 1 million barrels to global supply, but Iraq has made it known that a production increase is not on the table for the June 22 meeting. The truth is probably someplace in the middle, with Venezuelan and potentially Iranian production on the slide, and Russia eager to increase production,” he said.
Analysts have said that while U.S. shale is driving global oil-production growth, it wasn’t enough to offset supply issues elsewhere.
The U.S. Energy Information Administration forecasts the country’s production will rise to 10.7 million barrels a day on average in 2018, up from 9.4 million barrels a day last year.
Commerzbank estimates that to plug the growing supply gap, global production needs to be raised by more than the 300,000 barrels a day favored by swing producer Saudi Arabia.
Looking ahead, investors are awaiting a report from Baker Hughes on the number of rigs drilling for oil in the U.S.—a proxy for activity in the sector.
Elsewhere in the energy complex, July gasoline
rose less than 0.1% to $2.117 a gallon, while July heating oil
lost 0.3% to $2.173 a gallon. July natural gas
was trading 1% lower at $2.901 per million British thermal units.