Oil prices fell about 2 percent on Friday after a consultant forecast a rise in OPEC production for July despite the group`s pledge to curb output, reigniting concerns the global market will stay awash with crude.
Petro-Logistics, which tracks OPEC supply forecasts, said OPEC crude production would rise by 145,000 barrels per day (bpd) this month, taking the group`s combined output above 33 million bpd.
Higher supply from Saudi Arabia, the United Arab Emirates (UAE) and Nigeria would drive this month`s gains, it said.
Benchmark Brent crude futures were down 92 cents or about 1.9 percent at $48.38 a barrel at 12:16 p.m. (1616 GMT), while U.S. West Texas Intermediate (WTI) crude futures traded at $45.99 a barrel, down 93 cents or 1.98 percent.
OPEC and some non-OPEC states, such as Russia, pledged to cut production by 1.8 million bpd between January this year and the end of March 2018.
The UAE energy minister, whose country`s oil output has been rising, said he was committed to the output cut and he hoped the deal would have a significant impact in the third and fourth quarters.
"We have the OPEC meeting in Russia on Monday and that’s going to be top of mind," said Dan Katzenberg, Senior Exploration and Production analyst at Baird and Company in New York.
The meeting gathers several ministers from OPEC and non-OPEC member countries in St. Petersburg. Kuwaiti Oil Minister Essam al-Marzouq, whose country heads the joint ministerial committee, said attendees would discuss steps for continuing the production cuts.
The committee, known as the JMMC, can make recommendations to OPEC and other producers to adjust the deal, if necessary.
However analysts expressed skepticism that the group will address rising production from Nigeria and Libya, two OPEC members exempted from the cuts.
"There’s no expectation. ..that there’s going to be anything of substance in that meeting," said Katzenberg, "It’s highly unlikely steepen the cuts."
"Libya and Nigeria won`t be too enthusiastic to cap their production," said Frank Schallenberger, head of commodity research at LBBW.
The discount of U.S. crude futures front-month versus the second-month briefly fell to just 12 cents per barrel during the Friday trading session, the lowest since December 2014. This makes it less profitable for speculators to buy oil, sell it forward and store it in the meantime.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)