17 April 2015, News Wires – Brent crude oil prices fell over a dollar on Friday, ending a run of rallies earlier in the week, after Opec said that its output surged in March, adding to a global glut.
Opec said its March production jumped 810,000 barrels per day, to 30.79 million bpd which is equivalent to a third of global supply.
Front-month Brent crude futures were down a dollar, or 1.6%, at $62.98 per barrel in early trading on Friday. US crude was down 81 cents at $55.90 a barrel.
Reuters technical analyst Wang Tao said that Brent could fall further to slightly above $61.20 a barrel before finding market support.
Dipping output from the US and other rival producers due to oil prices halving since June last year, increased demand for Opec’s supplies, the organisation said.
“The strategy of Opec to put pressure on the high-cost producers is working, but the individual members seem to have moved off that focus and are instead producing as much as they can,” said Jamie Webster, analyst at IHS in Washington and an Opec expert.
Opec’s report may reinforce the perception that major producers are staking out market share ahead of a potential rise in Iranian exports following its framework accord with world powers over its nuclear programme.
Friday’s price fall at least temporarily ended a rally that has seen Brent gain over 16% in value since the beginning of the month, triggered by Middle East conflict and a dip in US oil production.
Open interest in Brent futures, which represents the total number of open contracts, has risen by a third this year to a record 2 million contracts this week. Market analysts say that volume precedes price, implying that soaring open interest indicates a rally as more traders open up new long positions in anticipation of rising prices.