Oil pares weekly gain as rising Opec output swells glut

london — Oil fell for a second day, trimming a weekly advance as investors weighed signs of a slowdown in US drilling against data showing Opec’s biggest members are pumping crude at a record pace.

Futures fell as much as 1.5 per cent in New York. Saudi Arabia, Iraq and the UAE each produced at a record in May, the International Energy Agency said on Thursday. While the US Energy Information Administration said production from prolific shale formations will fall next month to the lowest since January, the nation’s output expanded again last week and stockpiles remained more than 90 million barrels above the five-year average for the time of the year.

Oil’s recovery from a sixyear low has faltered amid speculation that global production will expand as prices rebound, prolonging a surplus. The Organisation of Petroleum Exporting Countries last week decided to maintain its output target as it sought to defend market share against higher-cost producers including US shale.

“With the strategy from Opec to keep pumping oil at a high level to preserve market share, there is a limit to how high prices can rise in the short term,” Jens Pedersen, a Copenhagen-based commodities analyst at Danske Bank A/S, said by e-mail. “That is keeping oil prices range-bound.”

West Texas Intermediate for July delivery declined as much as 93 cents to $59.84 a barrel in electronic trading on the New York Mercantile Exchange and was at $60.23 at 1.38pm London time. It lost 66 cents to $60.77 on Thursday. Prices are up 1.9 per cent this week and 13 per cent in 2015. —