Glut weighs on Brent crude, but storm supports US prices

Glut weighs on Brent crude, but storm supports US prices

Brent crude oil prices dipped in early Asian trade on Tuesday as strong global output stoked worries about oversupply, while U.S. contracts were supported as a tropical storm hit the coast of oil-producing Texas.

The fall in the Brent international benchmark follows three straight sessions of decline that have seen prices lose almost 5 percent in the past week.

"Rising OPEC supplies are negating some of the supportive influence from unpredictable geopolitical flare-ups in the Middle East and weighing on Brent prices," ANZ bank said in a note on Tuesday.

"Iraq, a member of OPEC, plans to increase exports by about 25 percent to around 3.8 million barrels per day this month," it added.

But crude prices in the United States received some support from a tropical storm in the Gulf of Mexico that is expected to hit the coast of Texas on Tuesday morning.

More than 45 percent of U.S. refining capacity is located along the U.S. Gulf Coast, which is also home to about half of total U.S. natural gas processing capability.

Brent had dropped 5 cents to $63.90 a barrel by 0012 GMT, down almost 5 percent since June 10.

Front month U.S. crude futures were up 4 cents at $59.56 a barrel. It has been trading in a trend channel of $57-$62 per barrel that has been in place since the beginning of May