SINGAPORE: Oil prices were mixed on Monday, caught between the downward pull of rising Russian production and US oil drilling activity at its highest since 2015, and upward pressure from strong demand, especially in Asia.
However, analysts expect surging US output to start offsetting efforts led by the Organization of the Petroleum Exporting Countries (OPEC) to withhold production, which have been in place since 2017 and in the first half of this year have pushed up prices significantly.
Brent crude futures, the international benchmark for oil prices, were at $76.50 per barrel at 0215 GMT, up 4 cents from their last close.
But US West Texas Intermediate (WTI) crude futures were down 8 cents at $65.66 a barrel.
Prices were weighed down by another rise in the number of rigs drilling for new oil production in the United States, which crept up by one to reach its highest level since March, 2015 at 862, according to energy services firm Baker Hughes on Friday.
That implies that US crude output, which is already at a record-high of 10.8 million barrels per day (bpd), will also rise further.
“Non-OPEC supply is expected to rise sharply in 2019 led by US shale growth along with Russia, Brazil, Canada and Kazakhstan,” US bank JPMorgan said in its quarterly outlook published on Friday, adding that it was bearish for the oil price outlook going into the second half of the year.
Going into next year, the bank said “oil fundamentals are expected to weaken in 2019 on the back of stronger than expected non-OPEC supply but also potential release of barrels from OPEC as the joint accord between OPEC and non-OPEC is unlikely to stay in place.”
OPEC, together with some non-OPEC producers including Russia started withholding output in 2017 to end a global supply overhang and prop up prices.
OPEC and its partners are due to meet on June 22 at the group’s headquarters in Vienna, Austria, to discuss policy.
Meanwhile, Russian news agency Interfax reported on Saturday that Russia’s oil production, the world’s biggest, had risen to 11.1 million bpd in early June, up from slightly below 11 million bpd in most of May and well above its target production of under 11 million bpd as part of the deal.
Beyond changes in the supply-side, strong demand has been supportive of oil prices.
In top importer China, overseas crude purchases remain above 9 million bpd, despite a recent dip away from records.
And in India, Asia’s no. 2 buyer, May fuel demand rose by 3.4 percent compared with the same month last year, data from the Petroleum Planning and Analysis Cell of the oil ministry showed on Monday.
Oil mixed as rising US, Russia supplies weigh while strong demand provides support
Oil mixed as rising US, Russia supplies weigh while strong demand provides support
US trade policy uncertainty sees muted response from markets
RIYADH: President Donald Trump renewed his condemnation of the US Supreme Court on Monday after it ruled against his sweeping tariff program last week, vowing to turn to other powers and licenses but giving no details.
The Supreme Court, in a 6-3 ruling on Friday, voided most of the tariffs Trump imposed in 2025, finding that the emergency law he relied on did not allow the imposition of the levies.
Trump said on Saturday he would raise a temporary tariff from 10 percent to 15 percent on US imports from all countries, the maximum level allowed under the law, a day after the court ruled he had exceeded his presidential authority when he imposed an array of higher rates under an economic emergency law.
"The court has also approved all other Tariffs, of which there are many, and they can all be used in a much more powerful and obnoxious way, with legal certainty, than the Tariffs as initially used," he wrote in a social media post.
US stock index futures slipped on Monday as traders reacted to the latest twist in the US’s economic policy.
At 12noon GMT, Dow E-minis were down 162 points, or 0.33 percent, Nasdaq 100 E-minis were down 129 points, or 0.51 percent, and S&P 500 E-minis were down 23.75 points, or 0.34 percent.
Most megacap and growth stocks were lower in premarket trading, though Alphabet bucked the trend with a 0.3 percent gain after rising around 4 percent on Friday.
“It’s really hard from a business standpoint when you are at a company to know how do you plan if you’re not even sure about suppliers, supply chains and what the tariffs are going to look like,” said Arthur Laffer Jr., president of Laffer Tengler Investments, according to Reuters.
“That’s a huge concern for corporate America and why it was really important to get that hammered out and ironed out as fast as possible, so that companies know what the playing field really looks like, and they can plan accordingly,” he added.
All three main stock indexes clocked weekly gains on Friday as markets took the Supreme Court’s decision in stride, with the Nasdaq snapping a five-week losing streak.
Other stock markets across the world greeted the latest wave of uncertainty with a muted response.
In the Gulf region, Saudi Arabia’s main market — which had been closed on Sunday due to a national holiday — ended the day up 0.34 percent.
Dubai’s main share index closed up 1.82 percent, led by a 3.64 percent gain in blue-chip developer Emaar Properties and a 2.92 percent leap in Emirates NBD Bank.
In Abu Dhabi, the index ended the session up 0.55 percent, with Americana Restaurants International leading the gainers with its share price surging 7.73 percent.
Qatar’s index closed up 1.08 percent, driven by banking shares, including a 0.43 percent uptick in Qatar National Bank, the region’s largest lender.
Other global markets faced a mixed picture, with the UK's FTSE 100 subdued on Monday.
The blue-chip index was up 0.1 percent at 12:00noon GMT, after closing at record highs last week. For the UK, the tariff rate has increased from 10 percent to 15 percent,
Unicredit analysts noted, following Trump's latest announcement.
Vijay Valecha, chief investment officer at Century Financial said the possible US tariff increase from 10 percent to 15 percent “ has brought trade tensions back into focus, tempering the optimism seen after the recent Supreme Court tariff ruling.”
He added: “Markets are now reassessing the economic impact of higher import costs, possible retaliation from trade partners, and the broader implications for global growth.”
