Oil prices slipped today over speculation that Saudi Arabia might raise its crude supply, while investors kept a close watch on economic and inventory data from the US, to get an indication of what demand is like in the world’s largest oil consumer.
Brent crude dropped by 15 cents to $117.37 a barrel, while US crude slipped by five cents to $96.71, reported Reuters.
The world’s top oil exporter, Saudi Arabia, is likely to increase its production in the second quarter to meet the rise in demand from China, as well as to drive economic revival in the rest of the world.
According to analysts, Saudi Arabia’s move to reduce output drastically by about 700,000 barrels per day (bpd) in the last two months of 2012 led to the tightening of supply and boosted oil prices.
Supply has also increased in the US, where weekly oil inventories data is anticipated to indicate a build in crude stockpiles, which could be detrimental for prices.
On the other hand, a supply surplus in the US Midwest will continue, as oil shipments on the Seaway pipeline between the US Midwest and the Gulf Coast will run at less than the daily capacity of 400,000 barrels.
Investors will focus on the US economic data, which is expected to be released this week, to get an update on riskier assets, such as equities and oil.
The result of Iran’s nuclear negotiations with major world powers, scheduled to held next week, will also be at the centre of attention, while analysts expect any solution to emerge only after Iran’s elections in June.
Image: Saudi Arabia is expected to raise its output in the second quarter. Photo courtesy of freedigitalphotos.net / Victor Habbick.