Oil prices have bounced back on account of market expectations that US crude stockpiles may decline.
However, the further hike in prices has been capped by rising US production and concerns that the Organization of the Petroleum Exporting Countries (OPEC) may make a decision to increase output at a meeting to be held in Vienna later this month.
Brent crude futures LCOc1 jumped by 25 cents, or 0.33%, to reach $75.53 a barrel, while US West Texas Intermediate (WTI) crude CLc1 soared 44 cents, or 0.68%, to stand at $65.19, Reuters reported.
Futures brokerage OANDA Asia-Pacific trading head Stephen Innes was quoted by the news agency as saying: “It’s all about supply, whether it’s OPEC raising output or US increasing production, all roads lead to higher global oil supplies, which is leaving oil traders shaking in their boots.”
Saudi Arabia and Russia recently held negotiations to explore the possibility of raising production to address potential supply shortfalls from Iran and Venezuela.
Samsung Futures commodity analyst Kim Kwang-rae said: “The gains are seen to be a technical rebound from the last session’s losses, but the market’s focus is on the OPEC meeting and how much Saudi Arabia and Russia would increase output.”
ANZ bank stated that despite the potential hike in supplies from OPEC members, the output will remain low for the moment.
Analysts polled by the news agency projected that US crude stocks were set to fall about 2.5 million barrels on average in the week ending 1 June.
Oil continues to face pressure from rising US production, which soared to 10.47 million barrels per day in March.