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.
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“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.”
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.