Oil fell for a third day on speculation the highest production in decades from the U.S. and OPEC’s largest members will keep global markets oversupplied.
Crude’s recovery from a six-year low has faltered as a rebound of almost 40 percent since March spurs output. While data from Baker Hughes Inc. showed drillers in the U.S. cut the number of active oil rigs for a 27th week, the nation’s output still rose to a three-decade high of 9.61 million barrels a day.
Saudi Arabia, Iraq and the United Arab Emirates, the three biggest producers in the Organization of Petroleum Exporting Countries, are pumping record amounts of crude. OPEC agreed June 5 to maintain its output quota to defend market share.
“The realization that there’s more than enough oil to meet demand is weighing on the market right now,” Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut, said by phone.
West Texas Intermediate for July delivery fell 44 cents, or 0.7 percent, to settle at $59.52 a barrel on the New York Mercantile Exchange. The total volume of all futures traded was 29 percent below the 100-day average for the time of day. Prices are up 12 percent this year.
Brent for July settlement, which expired Monday, declined $1.26, or 2 percent, to close at $62.61 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude closed at a $3.09 premium to WTI, the least since Jan. 26. The more-active August contract dropped 69 cents, or 1.1 percent, to $63.95.
Global equity markets declined after the latest round of bailout talks between Greece and its creditors ended in acrimony after leaders met for just 45 minutes in Brussels on Sunday.
“The continuing worry over Greece is bad for the European economy and that’s bad for oil,” Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $3.4 billion, said by phone. “In addition to the Greek problem, the Saudis are continuing to drive prices lower by pumping more oil.”
Drillers in the U.S. seeking oil reduced the number of active rigs by seven to 635 in the week ended June 12, Baker Hughes, an oilfield-services company, said Friday. The nation’s rig count has shrunk 60 percent since December.
OPEC has been boosting supply as it seeks to force higher-cost producers to cut output. The group has exceeded its target of 30 million barrels a day for a year, data compiled by Bloomberg show. Saudi Arabia, Iraq and the U.A.E., the three largest producers in the group, pumped at a record in May, the International Energy Agency reported June 11.
Libya’s output has climbed to 500,000 barrels a day, Libya News Agency reported, citing an unidentified official at National Oil Corp.
U.S. refineries operated at 94.6 percent of their capacity on June 5, up 1.4 percentage points from the previous week and the fastest rate since December, the Energy Information Administration said Wednesday. Crude supplies dropped 6.8 million barrels to 470.6 million during the same period.
“Refinery demand is going to peak soon while production should remain stout,” Stephen Schork, president of Schork Group Inc., a consulting firm in Villanova, Pennsylvania, said by phone. “We’re going to see inventories rebuild in the third and fourth quarters, which will put renewed pressure on prices.”
Crude supplies probably fell 2.5 million barrels last week, according to a Bloomberg survey of analysts. Gasoline stockpiles dropped while inventories of distillate fuel, a category that includes heating oil and diesel, climbed, the analysts said.
Gasoline futures for July delivery decreased 2.2 cents, or 1 percent, to settle at $2.0991 a gallon. July ultra low sulfur diesel fell 1.89 cents, or 1 percent, to close at $1.8703.
The average price for gasoline at the pump rose 0.3 cent to $2.804 a gallon Sunday, the highest since Nov. 25, the Heathrow, Florida-based AAA, the nation’s biggest motoring group, said.
Hedge funds cut bullish wagers on WTI to the lowest level in eight weeks, according to Commodity Futures Trading Commission data. Net-long positions fell by 3.7 percent in the seven days to June 9, while longs declined to a five-month low.
Money managers curbed net-long positions in Brent crude, the European benchmark, for a fifth week to their lowest level since March 24. Net-longs in futures and options combined fell by 3.4 percent to 201,180 contracts in the week to June 9.