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Oil retreats on potential supply hikes, Trump-Putin summit

Oil retreats on potential supply hikes, Trump-Putin summit

Mubasher: Oil prices dropped on Monday on easing worries over supply outages and the resumption of export activities at Libyan ports, amid anticipation of increasing supplies from Russia and other exporters.

US Nymex futures fell 0.6% to $70.62 per barrel (pb) early on the day, from their last close, as global benchmark Brent crude futures shed 0.6% to $74.85 from their last settlement.

Crude prices surged late last week on the back of supply disruptions in Libya, and offshore oil workers' strike in Norway and Iraq, but they ended down for the second week in a row.

However, traders in the meantime focus on potential supply hikes, even if Norwegian offshore worker union stepped up a strike for six days.

“There are mixed supply signals and I think the [Brent] price is likely to be in the low-to-mid $70s range,” Seoul-based Samsung Futures commodity analyst Kim Kwang-rae told Reuters.

Moreover, the first stand-alone meeting between US President Donald Trump, who repeatedly criticised higher crude prices, and Russian President Vladimir Putin is slated for today in Helsinki. The summit is “being watched in case they say something about oil,” Kim added.

Russia, along with other major oil exporters, may ramp up production, in the event that supply shortfalls hit global markets, Russian Energy Minister Alexander Novak said on Friday.

As for the trade spat between Washington and Beijing, the impact “should subside this week and could be a possible plus for oil prices,” yet a possible sale of US oil reserves would hurt prices, Asia-Pacific trading head at futures brokerage OANDA Stephen Innes told Reuters.

Bloomberg News reported that the Trump administration eyes relying on the US oil reserve of nearly 660 million barrels. This could weigh negatively on prices, Innes added.

By 6:56 am GMT, US Nymex futures fell 0.80% to $70.44, while Brent crude futures dropped 0.85% to $74.69 pb.