Oil prices dip as Iran signals support for small OPEC supply increase

Reuters – Oil prices dipped on Thursday as Iran signalled it could be won over to a small rise in OPEC crude output, likely paving the road for the producer cartel to agree a supply increase during a meeting on June 22.

However, prices were prevented from falling further by record refinery runs in the United States and a large decline in U.S. crude inventories, a sign of strong fuel demand in the world’s biggest economy.

Brent crude futures, the international benchmark for oil prices, were at $74.55 per barrel at 0040 GMT, down 19 cents, or 0.3 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $65.63 a barrel, down 8 cents.

Iran, a major supplier within the producer cartel of the Organization of the Petroleum Exporting Countries (OPEC), signalled on Wednesday it could agree on a small increase in the group’s output during a meeting at OPEC’s headquarters in Vienna on June 22.

“There appears to be an air of confidence that this deal will move through,” said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore.

Tehran had previously resisted pressure by OPEC’s de-facto leader Saudi Arabia to raise output.

OPEC, together with other key producers including Russia, started withholding output in 2017 to prop up prices, but a tightening market in 2018 led to calls by major consumers for more supplies.

In a sign of strong demand, U.S. refineries processed a seasonal record of 17.7 million barrels per day (bpd) of crude oil last week, according to data from the Energy Information Administration (EIA) said on Wednesday.

Amid strong consumption, commercial U.S. crude inventories dropped by 5.9 million barrels in the week to June 15, to 426.53 million barrels C-STK-T-EIA, the EIA said.

U.S. crude oil prodution C-OUT-T-EIA was flat week-on-week, remaining at a record 10.9 million bpd.

Reporting by Henning Gloystein; editing by Richard Pullin