An oil refinery in Szazhalombatta, Hungary. International Brent crude oil futures were at $66.94 a barrel at 0747 GMT, down 0.3 per cent, from their last close. Image Credit: Bloomberg

Singapore: Oil prices dipped on Monday, dragged down by plentiful supply as US exports soar and compete with traditional producers from the Middle East in key markets such as Asia.

But markets were supported by optimism that Washington and Beijing would soon resolve a series of trade disputes that have dented global economic growth, analysts said.

International Brent crude oil futures were at $66.94 (Dh245.87) a barrel at 0747 GMT, down 18 cents, or 0.3 per cent, from their last close. They ended Friday little changed after touching their highest since Nov. 16 at $67.73 a barrel.

18cents

down ($66.94 a barrel) Brent crude futures at 0747 GMT from Friday

US West Texas Intermediate (WTI) crude futures were at $57.15 per barrel, down 11 cents, or 0.2 per cent, from their last settlement. WTI futures climbed 0.5 per cent on Friday, having marked their highest since Nov. 16 at $57.81 a barrel.

Traders said the dips were the result of ample oil supply amid surging exports from the United States, forcing other producers especially in the Middle East to start offering their crude at discounts.

Under pressure from that growth in US supply, Abu Dhabi’s flagship Murban crude has sold at a discount in Asia to its official selling price (OSP) for four straight months — the longest stretch in nearly two years.

Cargoes bought for loading in the first four months of 2019 were sold at discounts ranging from 5 cents to 40 cents a barrel, even as producer Abu Dhabi National Oil Company (ADNOC) cut the grade’s benchmark price for four consecutive months.

11%

a barrel down US West Texas Intermediate (WTI) crude futures

US crude oil production has hit a record 12 million barrels per day (bpd), an increase of more than 2 million bpd since early 2018. Exports hit a record 3.6 million bpd this month.

The surge in US oil output counters efforts led by the Middle East-dominated Organization of the Petroleum Exporting Countries (Opec) to cut output to tighten the market and prop up prices.

The Opec-led cuts as well as US sanctions against Iran’s and Venezuela’s oil exports pushed oil prices to 2019 highs last week.

While ample supply weighed on prices, trade optimism supported markets.

President Donald Trump said on Sunday he would delay an increase in US tariffs on Chinese goods thanks to “productive” trade talks and that he and Chinese President Xi Jinping would meet to seal a deal if progress continued.

US bank Goldman Sachs said on Monday that “the near-term outlook for oil is modestly bullish over the next two to three months”, but added that later in the year the outlook was weaker because of “an increasingly uncertain economic, policy and geopolitical backdrop” and also due to the surge in US exports.

“Long-dated oil prices will likely remain under pressure below $60 per barrel Brent and $55 per barrel WTI,” Goldman said.

— Reuters