Oil mixed as US dollar gains and key Opec meeting looms

[NEW YORK] Oil prices were mixed on Thursday, with Brent slipping and US crude gaining, as a stronger US dollar weighed and a key supply-setting meeting of the Organization of the Petroleum Exporting Countries (Opec) loomed.

Brent crude oil lost 80 cents to settle at US$75.94 a barrel, while West Texas Intermediate crude gained 25 cents to settle at US$66.89.

"The independent show of WTI strength is merely a catchup process to the higher priced products and Brent values," Jim Ritterbusch, president of Ritterbusch and Associates said in a note.

Brent and WTI hit 3-1/2-year highs in May but have since drifted lower, indicating investors expect the market to soon become better supplied as US crude production rises and as Opec and its allies look poised to increase output.

The US dollar gained against a basket of currencies, approaching the six-month high it hit in late May as the euro fell broadly as the European Central Bank planned to keep interest rates at record lows into the summer of 2019.

"(ECB President Mario) Draghi came out a little bit more dovish than people thought he was going to be. And that really caused the euro to take a dip and the (US) dollar to go up, which is putting downward pressure on prices," said Phil Flynn, analyst at Price Futures Group in Chicago.

A stronger US dollar makes greenback-denominated commodities, like oil, more expensive for holders of other currencies.

Oil supply concerns have also weighed on the market.

In 2017, Opec began cutting about 1.8 million barrels per day to support the market. But, with Brent prices up by around 180 per cent from their 2016 low, global crude inventories falling, Venezuelan production plummeting and imminent sanctions against Iran, the group may soon end their supply cuts.

The alliance meets on June 22-23 in Vienna, where it is expected to come to a decision on output.

"A wait-and-see approach is taking hold across the energy complex as market participants buckle down ahead of next week's crunch Opec/non-Opec meeting," said Stephen Brennock, analyst at London brokerage PVM Oil Associates.

Russian Energy Minister Alexander Novak said members of the Opec-plus production cut deal can consider returning up to 1.5 million bpd to the market gradually.

Saudi Energy Minister Khalid al-Falih said he expected a reasonable and moderate agreement next week when Opec and non-Opec oil producers meet.

The two ministers agreed to expand cooperation in oil and gas, Russia's ministry said in a statement after their meeting in Moscow.

REUTERS