Oil fluctuated in New York amid speculation the Organization of Petroleum Exporting Countries will keep output quotas unchanged even after a slide in prices.
Futures were little changed after dropping as much as 0.8 percent. OPEC, which meets in Vienna tomorrow, said global oil markets remain well-supplied even after its output fell in May for the first time in eight months. A U.S. government report today will show crude stockpiles shrank last week, according to a Bloomberg News survey. The industry-funded American Petroleum Institute yesterday said inventories rose 1.6 million barrels.
“OPEC’s output is a very significant feature of the oil market and has the potential to make quite significant changes to supply and impact prices,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “The consensus view is that at current prices it’s not too likely that we’ll get any public announcement on production-quota cuts.”
Oil for July delivery was down 9 cents at $83.23 a barrel in electronic trading on the New York Mercantile Exchange at 2:55 p.m. in Singapore. It earlier dropped as much as 69 cents to $82.63 a barrel. Yesterday, futures rose 0.8 percent to $83.32. Prices are down 16 percent this year.
Brent crude for July settlement on the London-based ICE Futures Europe exchange, which expires tomorrow, was 34 cents higher at $97.48 a barrel. The European benchmark grade was at a premium of $14.23 to New York crude from $13.82 yesterday, the lowest since May 5. The more actively traded Brent future for August was up 20 cents at $97.17.
OPEC, responsible for about 40 percent of global oil supplies, pumped 31.58 million barrels a day last month, the 12-member group’s secretariat said in its Monthly Oil Market Report yesterday. That’s down from 31.64 million in April and exceeds its quota of 30 million agreed on in December.
Saudi Arabia, Kuwait, Qatar and the United Arab Emirates would like to raise the output ceiling by 500,000 barrels a day, an OPEC delegate said yesterday, declining to be identified because member countries are still in talks. Iran, facing a European Union embargo on its oil exports from July 1, and Venezuela have been joined by Iraq and Angola in warning that supplies are excessive.
OPEC will keep its official production ceiling at 30 million barrels a day, according to all 20 traders and analysts surveyed by Bloomberg News last week. A decision to adjust output will depend on findings from the group’s economic committee, Iraq’s Oil Minister Abdul Kareem al-Luaibi said in an interview yesterday.
“Demand has been incredibly weak,” said Dominic Schnider, the global head of commodity research at UBS AG’s wealth-management unit in Singapore. Boosting supply “will really be the wrong signal.”
Oil in New York fell after a bearish “death cross” formed on the daily technical chart, according to data compiled by Bloomberg. The 50-day moving average, at $96 a barrel today, dropped below the 200-day mean at $96.41 for the first time since December. Investors typically sell contracts when the moving average for a shorter period falls below a longer one.
U.S. crude stockpiles climbed to 385.7 million barrels last week, the API data showed. An Energy Department report today may show supplies decreased 1.5 million barrels, according to the median estimate of 12 analysts surveyed by Bloomberg News.
Gasoline inventories fell 878,000 barrels, the API said. They are forecast to rise 1.4 million barrels, the survey showed. Distillate stockpiles, a category that includes diesel and heating oil, increased 519,000 barrels compared with a projected 1.2 million-barrel gain in the government report.
U.S. gasoline demand will average 8.69 million barrels a day this year, the Energy Department said in its monthly Short-Term Energy Outlook yesterday. That’s up from last month’s projection of 8.67 million barrels. The department also cut its estimate for regular-grade gasoline at the pump to an average of $3.56 a gallon, down from $3.71.