Crude oil dipped on Tuesday on expectations of rising OPEC output and a potential increase in U.S. shale production, but analysts said that strong refinery demand was preventing further price falls. “Investors remained cautious heading into the OPEC … meeting this Friday, with Brent coming under the most selling pressure,” ANZ bank said on Tuesday.
“Expectations appear to be shifting from an unchanged strategy to an effective lift in production, as both Iran and Iraq posture about higher exports in 2015. This comes at a time when U.S. shale oil producers are also positioning for a resumption in output after this year’s price rises,” it added. Yet analysts also said that prices were receiving some support from firm refinery demand, preventing prices from falling further.
“Refineries are on the cusp of higher crude runs as we approach 3Q2015. On balance, we think any short-term price weakness will be dissolved by the pickup in end-user demand, higher runs and shrinking U.S. supply growth,” JP Morgan said in its latest monthly oil report. Front-month Brent crude futures LCOc1 had fallen 13 cents to $64.75 per barrel by 0043 GMT (20:43 EDT) on Tuesday.