Oil prices retreat in Asia over concerns about a global supply dearth
Oil prices fell on Monday on concern about a global supply glut as OPEC prepares for a meeting at which it is expected to maintain output.
American benchmark West Texas Intermediate (WTI) for July dropped 70 cents to US$59.60 a barrel, while Brent shed 73 cents to US$64.83.
Prices had jumped on Friday following a mixed U.S. stockpiles report. The United States Department of Energy revealed Thursday a healthy decline in crude oil and gasoline reserves — but also a rise in output that could aggravate the global oversupply.
However, dealers remain worried about demand as the global economy struggles to pick up the pace.
The Organization of the Petroleum Exporting Countries (OPEC), which pumps about a third of the world’s oil, is to meet for a produc- tion gathering on Friday, at which it is tipped to endorse its current rate of production.
The cartel’s decision in November to keep output at 30 million barrels a day helped fuel a massive sell-off that saw prices plunge more than 60 percent between June and January.
“Production is going to have to come down to prevent oil prices falling away,” Ric Spooner, a chief analyst at CMC Markets in Sydney, told Bloomberg News.
“Not only is Saudi Arabian output steady but we also saw U.S. production flicking up again. That’s why we’re constrained on the upside.”