Seoul — Oil prices fell on Thursday on expectation that members of the Opec cartel will step up production in the face of concern about supply from both Venezuela and Iran.
A surprise build-up in US crude inventories also weighed on prices, driving the spread between Brent crude and US West Texas Intermediate (WTI) close to its widest in three years.
International benchmark Brent futures were down 27c or 0.34% at $79.53 a barrel at 3am GMT.
US West Texas Intermediate (WTI) crude futures were down 17c or 0.24% at $71.67 a barrel.
The Organisation of the Petroleum Exporting Countries (Opec) may decide to increase oil output to make up reduced supply from Iran and Venezuela, in response to concern from Washington over a rally in oil prices, Opec and oil industry sources told Reuters.
Concern about supply from Iran and Venezuela, following new US sanctions, had pushed both Brent and WTI to multiyear highs, with Brent breaking through the $80 threshold last week for the first time since November 2014.
“The chat is still that Opec will do something at its June meeting in reaction to the looming prospect of a fall in crude production and exports from both Iran and Venezuela as the year progresses,” said Greg McKenna, chief market strategist at AxiTrader, a forex and CFD (contracts for difference) provider.
Opec and some major non-Opec oil producers are scheduled to meet in Vienna on June 22.
The group previously agreed to curb their output by about 1.8-million barrels a day to boost oil prices and clear a supply glut.
“Any signs that the group may be heading towards an early exit from the production cut agreement would weigh on prices,” ANZ bank said in a note.
Meanwhile, commercial US crude inventories rose by 5.8-million barrels in the week to May 18, beating analyst expectations for a decrease of 1.6-million barrels, the Energy Information Administration (EIA) said on Wednesday.
Elsewhere, Libya, which is an Opec member, cut its oil production by about 120,000 barrels a day as unusually hot weather prompted power problems, an official from the National Oil Corp said on Wednesday.
Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore, said prices were getting some support from talk that Sinopec, Asia’s largest refiner, would increase US crude oil imports to a record high.
“Recent flow is suggesting short-term traders are looking to sell the $80 a barrel chart-toppers anticipating a possible compliance shift within the Opec-Non-Opec supply agreement,” he said in a note on Thursday.