Oil traded near $66 a barrel in New York amid signs OPEC nations may clash over production policy when they meet later this month.
Futures fell 0.6 percent on Friday and are headed for a third week of declines. The U.S. was said to ask key producers to raise output to compensate for potential supply shortfalls, and Saudi Arabia and Russia have signaled they’re ready to increase. However, Venezuela and Iran have written to fellow OPEC members urging unity against American sanctions, according to letters seen by Bloomberg News.
The OPEC meeting may end in failure due to conflicting positions of member countries, according to Sanford C. Bernstein & Co.
Crude had rallied to the highest level since November 2014 in late May but has receded since then on speculation the Organization of Petroleum Exporting Countries will ease production curbs.
Meanwhile, U.S. drillers continue to pump crude at a record pace.
“After Saudi Arabia and Russia made the suggestion that OPEC starts lifting output in the second half, the market has been on its heels.
“In the end, OPEC will make sure to tread carefully,’’ said Jens Naervig Pedersen, senior analyst at Danske Bank A/S in Copenhagen.
West Texas Intermediate for July delivery was at $65.59 a barrel on the New York Mercantile Exchange, down 36 cents, at 12:46 p.m. in London. The contract is 0.2 percent lower on the week. Total volume traded was about 16 percent below the 100-day average.
Brent futures for August settlement were 86 cents, or 1.1 percent, lower at $76.46 a barrel on the London-based ICE Futures Europe exchange, after gaining $1.96 on Thursday. The global benchmark traded at a $10.92 premium to WTI for the same month, after settling on Thursday at $11.43, the widest close since February 2015.
Futures rose 0.5 percent to 468.3 Yuan a barrel on the Shanghai International Energy Exchange, after edging up 0.2 percent on Thursday.
With some members of OPEC resisting the Saudi-Russia proposal to ease output caps that have been in place since the start of 2017, attention is also on a Moscow meeting between Russian President Vladimir Putin and Mohammed bin Salman, the powerful Saudi crown prince, at a World Cup Soccer match on June 14. That’s only eight days before OPEC’s crucial Vienna gathering.
Meanwhile, the output-boost request from the U.S., which is not part of the supply deal, was made after U.S. retail gasoline prices surged to their highest in more than three years and President Donald Trump publicly complained about OPEC policy and rising prices.
It also follows Washington’s decision to re-impose sanctions on Iran, putting the OPEC member’s crude exports at risk. Fellow producer Venezuela’s oil industry is also struggling with an economic crisis.
Oil market news:
Oil exploration in Africa is showing signs of recovery after the number of active offshore rigs rose to 17 in May, the highest in almost two years, according to Baker Hughes data. More are scheduled in coming months
OPEC’s members all benefited from their supply deal, but the rewards weren’t evenly divided. The group’s overall oil-export revenues climbed by 28 percent in 2017 to $578 billion, according to data released by it on Thursday.
China’s crude oil imports fell 1.1 percent to 39.05 million tons in May, the General Administration of Customs in Beijing said. That’s down from a record set in April and lowest since February.
Amaka E. Nliam