Oil declined for a third day in New York after Russia’s energy minister reiterated that OPEC and its partners will discuss phasing out supply curbs when they meet next month.
West Texas Intermediate futures slipped 0.7%, extending their pullback from the three-year high reached on May 22. Russia and the Organisation of Petroleum Exporting Countries will discuss whether it’s appropriate to scale back output cuts, Energy Minister Alexander Novak said in St Petersburg, adding that Russia has a common position with Saudi Arabia that any decision will be guided by market conditions.
Speculation is swirling over whether OPEC and its allies will ease output curbs aimed at shrinking a global glut, and pump more to fill any potential supply gaps stemming from renewed US sanctions on Iran and economic turmoil in Venezuela.
“OPEC will decide to offset any further losses of supply,” said Carsten Fritsch, an analyst at Commerzbank in Frankfurt. “We will get constant talk about this ahead of the meeting, unless prices drop significantly from here. Novak added further fuel to this debate.”
West Texas Intermediate for July delivery slid 47 cents to $71.37 a barrel on the New York Mercantile Exchange at 12:24. Total volume traded was about 17% below the 100-day average.
Brent futures for July settlement were down 68c to trade at $79.12 a barrel on the London-based ICE Futures Europe exchange. The global benchmark was $7.77 a barrel above WTI for the same month. It closed at $7.96 premium in the previous session, the widest since April 2015.
The grades are diverging as rising inventories and record output in the US weigh on American futures, while risks to supply from Iran to Venezuela buoy Brent. A lack of pipelines that can transport crude pumped from the inland shale fields to refineries in the US Gulf Coast is leading to rising stockpiles as American production tops 10 million barrels a day.
US inventories expanded by 5.78 million barrels to about 438 million barrels last week, data from the Energy Information Administration showed, versus a 2 million-barrel decrease predicted in a Bloomberg survey.
Yuan-denominated futures for September delivery were up 0.1% to trade at 485 yuan a barrel in afternoon trading on the Shanghai International Energy Exchange. The contract declined 0.1% to 484.6 yuan on Wednesday.
The US and Venezuela expelled each other’s top diplomats after America imposed sanctions in the wake of a disputed presidential election in the economically fragile Latin American nation. Investors are also watching how renewed US sanctions on the Iranian oil industry and exports affect the market.
Other oil-market news:
• OPEC and allied oil producers including Russia are discussing new ways of measuring global crude stockpiles, signaling a possible decision that could affect production cuts they’re making to ease a global glut.
• Earlier this month, ConocoPhillips obtained court orders freezing assets owned by Venezuelan oil company Petroleos de Venezuela SA in the Caribbean.
• PDVSA hasn’t been able to load a single supertanker of fuel oil to send to China, and vessels were diverted away from Caribbean ports and are backed up around Venezuelan terminals.
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