Oil prices drop on Greece, US out­put wor­ries

The China Post - - BUSINESS INDEX & -

Oil prices slid on Mon­day amid bear­ish news on U.S. in­dus­trial out­put and a break­down in Greece’s debt talks.

Wor­ries that U.S. oil out­put is not de­clin­ing and Saudi Ara­bia could fur­ther ratchet open its oil pumps also are keep­ing a ceil­ing on prices, an­a­lysts said.

U.S. bench­mark West Texas In­ter­me­di­ate for July de­liv­ery dropped 44 cents to US$59.52 a bar­rel com­pared with Fri­day’s close.

Brent North Sea crude for July shed US$1.28 to stand at US$62.61 a bar­rel in Lon­don trade.

The U.S. re­ported in­dus­trial out­put fell another 0.2 per­cent in May af­ter a 0.5 per­cent drop in April, not un­ex­pected but still cast­ing a cloud on the strength of the econ­omy.

“May’s read­ing was well be­low ex­pec­ta­tions, and of­fers lit­tle re­lief af­ter the weak first quar­ter,” said Amanda Augustine of BBVA.

In­vestors were fo­cused as well on the tur­moil from the break­down in Greece’s talks with cred­i­tors, though the euro picked up strength dur­ing the day, pro­vid­ing some sup­port to crude prices.

“It’s a con­tin­u­a­tion of the sell-off we saw at the end of last week on over­sup­ply con­cerns,” said Matt Smith of Clip­per Data.

“We’re mov­ing to the low end of the range now, we con­tinue to be volatile and yet range-bound.”

In­vestors are also fo­cus­ing on Iran ahead of a June 30 dead­line for the Is­lamic re­pub­lic and world pow­ers to come to an agree­ment on curb­ing Tehran’s nu­clear pro­gram.

If a deal is reached and im­ple­mented, the pow­ers have agreed to grad­u­ally scale back sanc­tions im­posed since 2012, in­clud­ing on its petroleum in­dus­try.

Iran has the world’s fourth-largest oil re­serves but its ex­ports have fallen from more than 2.2 mil­lion bar­rels per day in 2011 to about 1.3 mil­lion be­cause of the sanc­tions.

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