Prices retreated on Tuesday, with Brent trading over $52 per barrel and WTI above $47. The drop comes after crude soared more than 8 percent in the previous trading session.
The US Energy Information Administration (EIA) said Monday the country’s oil production in 2015 was lower than the previous estimates, hit by falling oil prices. Production was lower than it forecast by one million barrels per day (bpd) at 9.4 million bpd from January to May. The EIA said June production fell by 100,000 bpd from May. It also cut estimates for production in the first five months of the year.
OPEC which is expected to boost crude production despite the glut in the global oil market also signaled a possible change of stance. In its Monday statement the cartel said it might cut output and “stands ready to talk to all other producers.”
The cartel of the world’s 12 major oil producers, OPEC is currently pumping at near-record levels – about 32 million barrels per day in July, which is 2 million more than the targeted 30 million.
Analysts say that bearish bets, driven by a misread of market data and bullish financial headlines have caused crude’s short-lived rally.
OPEC statements are not important without a change of policy by its largest producer Saudi Arabia, according to experts.
“Until Saudi Arabia says something this is all meaningless,” Mike Wittner, head of oil market research at Societe Generale in New York, told Bloomberg. “Why would the Saudis change their logic and waste all they have already done.”