Expected rise in Canadian oil sands production also weighed on WTI, traders said
By Ron Bousso
LONDON (Reuters) – Oil prices edged lower towards $49 a barrel on Monday as Iraq raised its crude exports target ahead of an OPEC meeting while Canadian production was set to restart after huge wildfires.
While OPEC has been unable to agree on an output freeze in an effort to support prices, Iraq was the latest Middle East producer to raise its export quota ahead of the meeting, supplying 5 million barrels of extra crude to its partners in June.
“We do not expect any (OPEC) agreement on a specific production target to be achieved,” Commerzbank analysts said in a note. “Iraq plans to discuss freezing oil production, but Iran and Saudi Arabia are unlikely to be ready to take any such step.”
Brent crude futures were at $49.27 a barrel at 1222 GMT, down 5 cents, while U.S. West Texas Intermediate (WTI) crude futures was down 6 cents at $49.27.
Strengthening of the dollar on higher expectations for a near-term U.S. interest rate rise also weighed on commodities priced in the currency.
Trade was subdued because of public holidays in Britain and the United States, where Monday’s Memorial Day is seen as the traditional start of U.S. summer driving season.
Vienna-based consultancy JBC Energy said that global oil demand between January and April rose by 1.5 million barrels per day from a year earlier. That was stronger than many forecasts and was driven by strong consumption in the United States, China and India.
U.S. crude output also dropped to its lowest since September 2014 after oil drillers cut rigs for a ninth week in 10 despite the recent rally in oil prices.
An expected rise in Canadian oil sands production also weighed on WTI, traders said. Suncor Energy is planning to ramp up output at its fields in Alberta this week after it was forced to shut them down earlier in May because of massive wildfires.
Outages because of wildfires in Canada and unrest in Libya and Nigeria have helped to push oil prices to a seven-month high in recent weeks.
(Additional reporting by Henning Gloystein in Singapore; Editing by Jason Neely and David Goodman)