Hong Kong - Oil halted its advance after a four-day gain before
OPEC meets Thursday to decide on whether to prolong output cuts by the group
and its partners.
July futures dropped as much as 1 percent in New York after
front-month prices Monday capped a 4.3 percent increase over four sessions.
Iraq backed a proposal to extend production curbs into 2018, adding to growing
support for longer cuts to clear a global glut.
In the US, crude inventories probably slid by 2 million
barrels last week, according to a Bloomberg survey before data from the Energy
Information Administration Wednesday, as the White House outlined plans to sell
strategic stockpiles to help trim the national debt.
Oil has climbed as Saudi Arabia and non-OPEC member Russia
rally support for a nine-month extension to the output-cut deal by the
Organization of Petroleum Exporting Countries and its allies, before this
week’s meeting in Vienna.
US President Donald Trump on Monday proposed selling
off half of the nation’s Strategic Petroleum Reserve, or SPR, as part of
proposed changes to the federal government’s role in energy markets.
“I think the market is down on the SPR news, but I think the
impact should be short lived,” said Tamas Varga, an analyst at brokerage PVM
Oil Associates Ltd. in London. “The US president is proposing selling off some
of the SPR, but he’s trying to do it in 2018.”
West Texas Intermediate for July delivery slid as much as 52
cents to $50.61 a barrel on the New York Mercantile Exchange and was at
$50.77 a barrel at 9:21 a.m. in London. Total volume traded was about 16
percent above the 100-day average. The June contract expired Monday after
advancing 0.8 percent to $50.73.
Brent for July settlement fell 37 cents to $53.50 a barrel
on the London-based ICE Futures Europe exchange. Prices climbed 26 cents, or
0.5 percent, to $53.87 on Monday. The global benchmark traded at a premium of
$2.70 to July WTI.
Saudi Arabia’s Minister of Energy and Industry Khalid Al-Falih secured
Iraq’s backing for a nine-month extension after talks in Baghdad with
counterpart Jabbar Al-Luaibi. Non-OPEC nations Oman and Mexico also confirmed their support for prolonging the
curbs through the first quarter of 2018.
Read also: Oil halts gains near $54
“An extension of the supply deal seems to have become a
formality,” said Norbert Ruecker, head of macro & commodity research at
Julius Baer Group Ltd. ‘‘However, unlike the sharp bounce seen in late
November, when the supply deal was announced first, oil prices have only reacted
modestly so far. The lukewarm reception to the news reveals that the belief
in a successful OPEC strategy is eroding.”
Oil-market news
China’s diesel exports fell to a three-month low, easing
from a record as the volumes fuel makers were allowed to sell overseas declined
and the nation’s oil refiners slowed as seasonal maintenance picked up.