Oil futures nearest to delivery traded on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange continued lower in early trade today as traders positioned ahead of next Friday’s meeting of the Organization of the Petroleum Exporting Countries in Vienna, and ahead of today’s 1 PM ET drilling report from Baker Hughes.
Given the uncertain situation regarding the easing of ongoing 1.8 million bpd OPEC, non-OPEC supply cuts, traders are keen to see whether today’s rig report will continue a trend in supporting soaring U.S. output. The data follows this week’s report from the International Energy Agency indicating world oil supplies would likely remain “finely balanced” even if recent supply disruptions from Venezuela and Iran are addressed by increasing OPEC output at its June 22 meeting.
The Energy Information Administration said Wednesday U.S. production jumped 100,000 bpd during the week-ended June 8 to a fresh record high at 10.9 million bpd, while on Tuesday said it projects domestic production to average at 10.79 million bpd for 2018 and 11.76 million bpd in 2019. On June 8, Baker Hughes revealed that oil companies in the United States added rigs for a ninth week out of the past 10, pushing the number of operating rigs in the United States to a fresh 38-month high at 862. The June 8 report revealed 121 more rigs were operating this year versus last with 65 rigs added in the second quarter.
Some analysts contend, even if OPEC boosted output by an unlikely 2.0 million bpd at the meeting, supplies could remain tight, with oil values subject to large price fluctuations given growing world oil demand and a fluid geopolitical situation.