Investing.com – WTI crude oil prices settled lower Monday as traders continued to assess the impact of fresh supply entering the market following OPEC's decision to lift output but losses were limited by a Canadian supply outage.
On the New York Mercantile Exchange crude futures for August delivery fell 50 cents to settle at $68.08 a barrel, while on London's Intercontinental Exchange, Brent lost 0.98% to trade at $74.58 a barrel.
Reports that an outage at Syncrude – Canada’s oil-sands complex in Alberta – would last through July, limited losses in crude prices as investors continued to digest OPEC's decision to raise production.
OPEC said last Friday it wanted countries –part of the production cut agreement – to increase production, returning to 100% compliance with agreed quotas by 1 July 2018.
While the oil-cartel appeared reluctant to give specific numbers on quotas, Saudi Arabia said the move would equate into a nominal output rise of around 1 million barrels per day (bpd), or 1% of global supply.
Analysts said, however, that a number of producers in the OPEC-led accord would struggle to increase output, leading to a more modest crude output hike.
"It is important to note that the market should only see a practical increase of about 600,000 barrels a day as a number of countries in the accord aren't capable of increasing production," National Alliance said in the aftermath of the OPEC decision.
Yet analysts remained bullish on the outlook for oil amid expectations crude supply risks from several countries including Venezuela and Iran could not only offset the additional supply but potentially lead to a supply deficit, which would support firmer oil prices.
"…the recent pick-up in outages (Libya, Nigeria, Canada) and the wing risks that Iran production falls even more than we had expected may end-up challenging OPEC's immediate spare capacity," Goldman Sachs said in a note to clients.
The bank reiterated its summer $82.50 barrel Brent price forecast.