U.S. and European oil prices diverged on Tuesday, with concerns about global oil supply still acting as a weight on West Texas Intermediate crude.
While oil futures have been pushed lower in recent days by the prospect of increased production, the U.S. benchmark has fallen more of late than Brent. That “is a surprising divergence, as Brent is more exposed than WTI to higher production in Russia and Saudi Arabia,” said Michael McCarthy, chief market strategist at CMC Markets.
Oil prices came under pressure last week after media reports that the Organization of the Petroleum Exporting Countries and Russia are discussing plans to lift their production for the first time since 2016.
OPEC and a group of non-OPEC countries led by Russia have since January 2017 cut production in an effort to tackle the global supply glut that had pulled prices to multiyear lows. Global inventories are now close to OPEC’s target, which has helped push up prices to three-year highs in recent weeks.
Baker Hughes BHGE, -2.72% on Friday reported that the number of active U.S. rigs drilling for oil rose 15 to 859 in the most recent week. That was the largest weekly gain since the week ended Feb. 9. But as U.S. output is already at record highs, that news wasn’t as damaging to crude as OPEC worries.
June natural gas NGM18, +0.31% rose 0.3% to $2.948 per million British thermal units.