Oil prices were up slightly in trading on Monday even though Russia and the United States boosted their production last month.  Markets remain concerned about plummeting Venezuelan crude output.  Encana photo.

US oil prices up .52 per cent, Brent down .03 per cent

Oil prices were up slightly on Monday.  Rising US and Russian production pressured prices, however, the market is concerned about falling Iranian and Venezuelan crude supplies.

By 1:12 p.m. EDT, benchmark Brent crude rose 2 cents to $76.48/barrel and US West Texas Intermediate was up 34 cents to $66.08/barrel.  The Canadian Crude Index fell 49 cents to $42.63.

On Friday, Baker Hughes reported the number of oil rigs in the United States increased by one last week to 861, the highest since March 2015.  US crude production is expected to increase as well.

In Russia, the country’s new agency Interfax reported on Saturday that Russian oil output rose from 11 million barrels per day (b/d) in May to 11.1 million b/d in early June.  This is 100,000 b/d over its target output.

Despite the increases in Russian and US production, the markets remain concerned about plunging production in Venezuela as well as reduced exports from Iran.

Struggling with an economic crisis and government mismanagement, Venezuela’s oil production is in decline and the situation is expected to worsen in the coming months.  As well, Iran is  facing newly imposed US sanctions after the Trump administration abandoned the Iran sanction relief program.

“Sentiment is caught in a tug of war between the drop in supply from Iran and Venezuela and the prospect of rising output from OPEC/non-OPEC coupled with rampant US shale production,” Stephen Brennock, analyst at brokerage PVM Oil Associates told Reuters.

The OPEC supply cut agreement has reduced the global crude glut.  However, “Non-OPEC supply is expected to rise sharply in 2019, led by U.S. shale growth, along with Russia, Brazil, Canada and Kazakhstan,” US bank JPMorgan said.

“Oil fundamentals are expected to weaken in 2019 on the back of stronger than expected non-OPEC supply, but also the potential release of barrels from OPEC as the joint accord between OPEC and non-OPEC is unlikely to stay in place,” JPMorgan said in its quarterly outlook.

OPEC and non-cartel countries participating in the supply pact will meet in Vienna on June 22-23.

Not all participants are eager to ease output curbs and boost their production.  On Monday, Iraq’s oil minister said that producers should not be influenced by pressure to increase their crude production.

According to Reuters, Jabar al-Luaibi said oil prices still require support and stability.  He added crude producers “should not over-exaggerate” the oil market’s need for higher supplies.

“This could be misinterpreted by speculators and consumers, leading to a significant fall in oil prices,” he said.