Saudi, Russia signal lift in oil output

Oil in New York headed for its longest run of losses in more than three months as Saudi Arabia and Russia consider raising output.

Futures dropped as much as 3.1 per cent on Monday, following a 4 per cent slump Friday.

Saudi Arabia and Russia have signalled they’ll restore some of their curtailed output after OPEC and allied producers concluded they’ve succeeded in draining a global glut. The rout that

started last week has wiped out all of oil’s gains in May. Futures reached a three-year high earlier in the month as US President Donald Trump renewed sanctions on Iran and the Venezuelan crisis deepened.

“The market is now pricing in the possibility that OPEC is going to raise production,” Price Futures Group analyst Phil Flynn said. An 800,000 to 1 million barrel a day increase would “barely” offset the expected loss from Iran and Venezuela but “the market is taking that as a big increase”.

West Texas Intermediate for July settlement fell US$1.77, or 1.2 per cent, to US$66.68 a barrel this week. Total volume traded was about half the 100-day average. Brent futures for July fell US$1.13 to US$75.58 a barrel on the London-based ICE Futures Europe exchange.

Higher crude prices are starting to affect demand, Daniel Yergin, vice chairman of consultant IHS Markit Ltd said. He was echoing concerns voiced a week earlier by the International Energy Agency, which advises major oilconsuming nations. US President Trump last month criticised OPEC for contributing to higher crude.

OPEC and its allies are likely to gradually raise oil output in the second half, Saudi Energy Minister Khalid Al-Falih said. He and his Russian counterpart Alexander Novak said while scaling back the supply caps was “on the table”, no decision had been made. The group has to decide unanimously whether to adjust output, said Suhail Al Mazrouei, United Arab Emirates energy minister and holder of OPEC’s rotating

presidency.