Published: Thu, June 21, 2018
Money | By Ralph Mccoy

Oil prices dip as Iran signals support for small OPEC supply increase

Oil prices dip as Iran signals support for small OPEC supply increase

U.S. West Texas Intermediate and international-benchmark Brent crude oil settled sharply higher as investors continued to position themselves ahead of a key meeting of OPEC producers that may decide to increase global output.

Additionally, in a sign of strong demand, US refineries processed a seasonal record of 17.7 million barrels per day (bpd) of crude oil last week, according to the EIA.

Brent crude futures, the worldwide benchmark for oil prices, were at $74.55 per barrel at 0040 GMT, down 19 cents, or 0.3 percent, from their last close.

Crude oil is catching some lift in Wednesday trading with WTI creeping into the $65/barrel handle as USA inventories deliver a slight drawdown.

The brewing tensions between the world's two largest economies comes ahead of Friday's highly anticipated meeting of oil ministers from around the globe at the Organization of the Petroleum Exporting Countries in Vienna.

Iran's Oil Minister Bijan Zangeneh said, "I don't believe at this meeting we can reach agreement".

Trump has in recent months repeatedly blamed OPEC for a spike in oil prices, but Zanganeh said it was USA sanctions on Iran and Venezuela that had fuelled fears of a supply crunch and put pressure on prices.

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Saudi Arabia and Russian Federation are said to be proposing a production boost of 1.5 million bpd, which observers and OPEC sources think is just a starting point for negotiations to settle on a compromise at somewhere between 500,000 bpd and 700,000 bpd.

Even with Iran appearing to fall in line, analysts do not expect a harmonious OPEC meeting.

In a sign of strong demand, United States refineries processed a seasonal record of 17.7 million bpd of crude oil last week, according to data from the Energy Information Administration (EIA) said on Wednesday.

Gasoline stockpiles rose by 3.3 million barrels, while inventories of distillate fuel, jumped by 2.7 million barrels, the EIA reported.

"Many consumer countries are anxious" about potential oil shortfalls, he said, noting that global oil demand is expected to climb in the coming months.

Iran previously said Venezuela and Iraq will join it in blocking a proposal to increase oil production by 1.5 million barrels per day worldwide.

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