Crude slid to a seven-week low amid speculation the Organization of Petroleum Exporting Countries will refrain from cutting its production target on Friday.
An index of future price uncertainty rose for a fourth day. OPEC is forecast to keep its output target unchanged, according to all but one of 34 analysts and traders in a Bloomberg survey last month. Iraq signaled it will increase exports this month and Iran urged OPEC to make room for more production if sanctions are lifted.
OPEC members have been pumping above their target for a year, swelling a global glut. Saudi Arabia has stood by its strategy of favoring market share over supporting prices after leading a group decision in November to maintain the collective production target.
“I don’t think the OPEC meeting will yield any surprises,” said Michael Hiley, head of over-the-counter energy trading at LPS Partners Inc. in New York. “Iraq continues to grow its production. There’s supply there. What is unknown is the demand side of the equation.”
Brent for July settlement slipped $1.77, or 2.8 percent, to $62.03 a barrel on the London-based ICE Futures Europe exchange, the lowest close since April 15. The European benchmark crude was at a premium of $4.03 to West Texas Intermediate, the U.S. marker grade.
WTI for July delivery dropped $1.64, or 2.8 percent, to $58 a barrel on the New York Mercantile Exchange.
The CBOE Crude Oil Volatility Index, which measures oil price fluctuations using options of the U.S. Oil Fund, rose 1.3 percent to 37.89.
OPEC, which supplies about 40 percent of the world’s oil, pumped 31.58 million barrels a day in May, exceeding its ceiling of 30 million barrels for a 12th consecutive month, according to data compiled by Bloomberg. The market is oversupplied by as much as 2.5 million barrels a day, Venezuela’s Energy Minister Asdrubal Chavez said.
“The chances of decreasing production are close to zero,” said James Williams, an economist at WTRG Economics, an energy-research firm in London, Arkansas. “OPEC is going to ride this out until they see supply and demand are balanced.”
Iraq, the second-biggest producer in OPEC, will boost shipments by about 100,000 barrels a day this month, Oil Minister Adel Abdul Mahdi said Wednesday. Iran, which in three weeks faces a deadline for a deal on its nuclear program, can return output to pre-sanctions levels in a short time and wants the 12-member group to make room for increased supply, said Oil Minister Bijan Namdar Zanganeh.
OPEC’s decision in November to leave the production target unchanged has helped to reduce the glut in oil markets, United Arab Emirates Energy Minister Suhail Mohammed Al Mazrouei said in Vienna.
“Iraqi production has been rising strongly from the southern fields,” said Andrew Slaughter, an industry analyst at the Deloitte Center for Energy Solutions in Houston. “Iran is waiting to bring production back online quickly once the sanctions are lifted.”
In the U.S., crude stockpiles declined by 1.9 million barrels in the week through May 29, according to a report from the Energy Information Administration Wednesday.
Production accelerated by 20,000 barrels a day to 9.59 million, rising for a second week, the EIA said. That’s the highest level since January 1983, according to EIA’s weekly estimates.
The nation’s output will continue growing as the price stabilizes, with shale still able to generate a 10 percent return at about $40 a barrel, ConocoPhillips Chief Executive Officer Ryan Lance told reporters in Vienna.
The world’s largest oil consumer sent a record volume of crude abroad in April with more cargoes bound for Asia and Europe and exports to Canada hitting an all-time high, Census Bureau data showed. Shipments rose 41 percent to average 586,379 barrels a day, the most in U.S. government data going back to 1920. The majority went to Canada.