Mubasher: Oil prices dropped on Monday, with Brent crudes tumbling more than 1.5% as traders factored in an expected production increase decided at the member meeting of the Organization of Petroleum Exporting Countries (OPEC) last week.

International Brent crude futures traded at $74.22 per barrel (pb) early on the day, falling by 1.8% from their last session, while US Nymex futures shed 0.2% to $68.42 pb, with the support of a slight fall in US drill count to 862 and Canadian supply interruption.

Nevertheless, global oil markets are set to remain relatively in short supply this year, Reuters reported citing analysts.

OPEC and non-OPEC allies including Russia have agreed on trimming output by 1.8 million barrels per day (bpd) since 2017, to support prices.

Due to abrupt shortages from key producers like Venezuela and Angola, the output came below OPEC’s target, driving the group, especially its de facto leader Saudi Arabia to reverse the disruptions by increasing production, while analysts warn that there is little space capacity for such increases.

“Saturday’s OPEC+ press conference provided more clarity on the decision to increase production, with guidance for a full 1-million bpd ramp-up,” Goldman Sachs stated in a note on Sunday, adding that this represents a major increase compared to Friday’s announcement, although the goal remains to stabilise inventories, not generate a surplus.

Moreover, any increase in supplies would mostly come from Saudi Arabia, the UAE and Kuwait, Emirates NBD bank analyst Edward Bell told Reuters, predicting that Brent prices would fall in a range between $65 and $70 pb for the rest of the year.

By 6:57 am GMT, Brent crude futures dropped 1.72% to $74.25 pb, while Nymex futures fell 0.31% to $68.37 pb.