The significant increase in production from OPEC in the month of June, along with President Trump’s insistent pressure on Middle East ally Saudi Arabia to increase production have finally taken the toll on global crude oil benchmarks. OPEC production increased by 0.32 million barrels per day in June compared to May, with Saudi Arabia alone increasing production by more than 0.4 million barrels per day. U.S. President Trump has been pushing Saudi Arabia to increase production by almost 2 million barrels per day.
Over the past few weeks, the price of North American benchmark West Texas Intermediate (WTI) declined from $75 per barrel to $70 per barrel as of today. The global benchmark Brent, similarly, declined from $79.2 per barrel to $73.6 per barrel as of today.
Based on our calculations, we expect the price to decline a bit further before fundamental buyers start emerging again. We expect, WTI to decline to $67 per barrel area and Brent to decline to $70 per barrel area.
Key global oil benchmarks:
WTI - $70.1/barrel
Brent - $73.4/barrel
OPEC basket - $74.4/barrel
Urals - $71.5/barrel
Oman - $72.1/barrel
Dubai - $71.2/barrel
Western Canada Select - $50.6/barrel