Oil in New York headed for its longest run of losses since February after Saudi Arabia and Russia proposed raising production later this year.
Futures slid 1.4% on Tuesday after Friday’s 4% decline. Saudi Arabia and Russia said OPEC and its partners may boost supply to make up for potential losses from other members, most notably Venezuela and Iran. There was no settlement Monday for West Texas Intermediate because of the US Memorial Day holiday and all trades will be booked Tuesday.
US President Donald Trump’s decision to reimpose sanctions on Iran and Venezuela’s slumping output drove oil to the highest level in more than three years earlier this month, prompting complaints from consuming nations like India about higher costs. The plan for OPEC and its allies to boost supply once more follows growing concerns that crude prices at current levels will slow demand growth.
“The market was not prepared for OPEC to get ready to return supply that soon,” said Jens Naervig Pedersen, a senior analyst at Danske Bank A/S in Copenhagen.
WTI for July delivery fell as much as 3.1% to $65.80 a barrel and traded at $66.95 on the New York Mercantile Exchange as of 12:09 p.m. in London. Futures are headed for a fifth straight session of declines, the longest such stretch since Feb. 9.
Brent futures for July settlement rose 0.4% to $75.72 a barrel on the London-based ICE Futures Europe exchange, after dropping $1.14 on Monday. The global benchmark traded at a $8.75 premium to WTI.
Meanwhile, explorers in the US added 15 oil rigs last week, taking the total to 859, the highest in more than three years, and adding to bearish signals for the market.
“We had a surprise rise in the rig count after a period where there’s been some speculation about bottlenecks in U.S. production limiting the prospect of further output increases,” Pedersen said. — Bloomberg