Crude slipped as Saudi Arabia pressed ahead with efforts to boost OPEC output.
Futures in London slid 2.3 percent as the Saudi energy minister said OPEC and its allies need to release more oil to the market as demand rises. Hikes to country quotas floated during talks in Vienna would amount to 1 million to 1.8 million barrels a day, a delegate said. It’s unclear how much that would translate into actual production because not all members are able to reach their quotas.
“Any supply increase that is less than 500,000 barrels a day would be bullish for the market,” said Alessio de Longis, a portfolio manager in OppenheimerFunds Inc.’s global multi-asset group in New York. “The risk of course is that we may have an announcement that is closer to 1 million.”
Saudi Arabia has proposed that the group increase output by about 600,000 barrels a day, according to delegates with knowledge of the talks. That would be commensurate with a combined quota increase of 1 million barrels a day, according to Bloomberg calculations based on data from the International Energy Agency.
Yet, the push for a supply boost by Saudi Arabia and non-OPEC member Russia has been opposed by producers such as Venezuela, and Iran Oil Minister Bijan Namdar Zanganeh said he doesn’t think OPEC can reach any agreement.
“The most important thing is the consumers,” Saudi Energy Minister Khalid Al-Falih said. “We’re not going to allow a shortage to materialize to the point that markets will be squeezed and consumers will be hurt.”
West Texas Intermediate crude for August delivery slid 17 cents to settle at $65.54 a barrel on the New York Mercantile Exchange, after earlier rising to as high as $66.22. Total volume traded was about 23 percent above the 100-day average.
WTI fell less than Brent as a Genscape Inc. report was said to show crude stockpiles shrank by 2.45 million barrels at the key storage hub in Cushing, Oklahoma.
Brent futures for August settlement declined $1.69 to end the session at $73.05 a barrel on the ICE Futures Europe exchange. The global benchmark traded at a $7.51 premium to WTI.
Producers are still discussing four scenarios for output hikes, according to a delegate. Meanwhile, Russia Energy Minister Alexander Novak said any oil output increase should be shared equally and oil prices are at suitable levels.
“With the Saudis sort of talking up the need for a lot more oil in the second half, that makes people feel they’ll likely be a little more aggressive than they would have otherwise,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.