London — Crude declined after the US government was said to have asked Saudi Arabia and other oil cartel Opec producers to raise oil supply.
The request for a 1-million barrels per day (bpd) increase follows Washington’s decision to re-impose sanctions on Iranian crude exports that had removed roughly the same amount from global markets when restrictions were previously in place earlier this decade. Opec pumped 31.9-million bpd last month, unchanged from April when production was the lowest in a year, according to a Bloomberg survey.
Crude has lost its grip after last month rising to the highest level in more than three years. The decline follows a proposal by Saudi Arabia and Russia to ease output cuts to replace potential supply losses in Iran and Venezuela. With Opec’s next summit a little more than two weeks away, the market is looking for any clues about the scale of possible output increases.
“Opec has every potential reason to raise production, they’ve achieved their mission,” said Nitesh Shah, a commodity analyst at Wisdom Tree Europe. “That’s going to be the focus for the next few weeks now.”
Brent futures for August settlement fell as much as $1.48 to $73.81 a barrel on the London-based ICE Futures Europe exchange, and were at $74.33 as at 1.53pm local time. The global benchmark crude earlier fell beneath its 50-day moving average for the first time since April 4.
Brent traded at a $9.86 premium to West Texas Intermediate (WTI) for the same month. WTI for July delivery dropped 24c to $64.51 a barrel on the New York Mercantile Exchange. Total volume traded was about 12% above the 100-day average.
With assistance from Tsuyoshi Inajima and Heesu Lee