Crude oil futures were lower during mid-morning trade in Asia Monday, with the Brent futures contract falling close to 2% amid profit-taking while markets were looking ahead for increased supply from OPEC and its allies after their meeting over the weekend.
At 10:30 am Singapore time (0230 GMT), ICE August Brent crude futures fell $1.43/b (1.89%) from Friday's settle to $74.12/b, while the NYMEX August light sweet crude contract was down 24 cents/b (0.35%) at $68.34/b.
Both benchmark contracts settled higher on Friday after the OPEC meet where a consensus on increasing supply was reached, surprising market participants who expected non-agreement among producer countries, including Iran, said analysts.
OPEC put aside political differences on Friday and agreed to an output increase. Saudi energy minister Khalid al-Falih -- who pushed hard for an increase in output -- said the volumes amounted to "just under 1 million b/d."
"The adoption of the 1 million b/d increase in crude output was seen yielding a positive initial reaction from the markets, with Brent crude touching a high of $75.83/b," IG market strategist Pan Jingyi said.
"Coming at less than the worst case scenario of a 1.5 million b/d increase as championed by non-OPEC producer, Russia, the conclusion had come about as a relief," she added.
Prices however, slumped amid profit-taking and lingering market uncertainties over details of the increase, analysts said.
"Prices surged post the OPEC meet on Friday and some profit-taking during the Asian session are pressuring prices lower," Phillip Futures investment analyst Benjamin Lu said.
"Markets are recalibrating the OPEC meeting results post the initial price reaction, but overall sentiment still remains bullish," he added.
While Falih on Saturday said that OPEC and its allies would adjust individual oil production caps according to each member's ability to pump more crude under their plan to add up to 1 million b/d of supply, Iranian oil minister Bijan Zanganeh was opposed to increasing quotas under the deal.
Zanganeh on Friday said full compliance -- without any increase in quotas -- was "what I wanted from the moment I arrived" in Vienna.
"We didn't discuss about number of barrels," he added. "We agreed to comply 100% of the resolution between the OPEC member countries."
Falih declined to give an exact timetable of how the 1 million b/d would be ramped up, saying the Joint Ministerial Monitoring Committee meeting would be monitoring market conditions.
Should it decide that supply and demand fundamentals warrant a significant change in output strategy, OPEC can call an extraordinary meeting, he said.
"We continue to believe that the core OPEC and Russia production increase will target higher output, stable inventories and not a sharp fall in prices," analysts from Goldman Sachs said in a note Saturday.
"In our view, the reality of today's deficit will likely prevail and we reiterate our summer $82.50/b Brent price forecast," they said, adding that "nonetheless our base case remains that Brent prices will sequentially decline to $75/b by year-end."
Elsewhere, data released by Baker Hughes on Friday, showed that the number of oil rigs in the US fell by seven to 1,052 for the week ended June 22.
The drop in NYMEX crude contract prices Monday morning was not as pronounced as the fall in Brent as the reduction in the oil rig count provided some support to NYMEX crude prices, analysts said.
As of 0230 GMT, the US Dollar Index was up 0.03% at 94.215.
