July futures dropped 0.9 percent in New York after front-month prices Monday capped a 4.3 percent increase over four sessions. Iraq backed a proposal to extend production curbs into 2018, adding to growing support for longer cuts to clear a global glut. In the U.S., crude inventories probably slid by 2 million barrels last week, according to a Bloomberg survey before data from the Energy Information Administration Wednesday.
Oil has climbed as Saudi Arabia and non-OPEC member Russia rally support for a nine-month extension to the output-cut deal by the Organization of Petroleum Exporting Countries and its allies. OPEC will meet in Vienna. While stubbornly high global inventories have taken longer-than-expected to drain, signs that U.S. supplies are starting to ease is adding to optimism.
“There are still negative pressures in the form of U.S. crude production and inventories,” said David Lennox, a resource analyst at Fat Prophets in Sydney. “The market is taking confidence from the likely extension of output cuts, but we’re not looking for any significant move higher.”
West Texas Intermediate for July delivery slid as much as 48 cents to $50.65 a barrel on the New York Mercantile Exchange and was at $50.73 a barrel at 8:08 a.m. in London. Total volume traded was about 20 percent above the 100-day average. The June contract expired Monday after advancing 0.8 percent to $50.73.
Brent for July settlement fell 52 cents to $53.35 a barrel on the London-based ICE Futures Europe exchange. Prices climbed 26 cents, or 0.5 percent, to $53.87 on Monday. The global benchmark traded at a premium of $2.73 to July WTI.
Saudi Arabia’s Minister of Energy and Industry Khalid Al-Falih secured Iraq’s backing for a nine-month extension after talks in Baghdad with counterpart Jabbar Al-Luaibi. Non-OPEC nations Oman and Mexico also confirmed their support for prolonging the curbs through the first quarter of 2018.
- The White House plan to trim the national debt includes selling off half of the nation’s emergency oil stockpile, part of a broad series of changes proposed by President Donald Trump to the federal government’s role in energy markets.
- China’s diesel exports fell to a three-month low, easing from a record as the volumes fuel makers were allowed to sell overseas declined and the nation’s oil refiners slowed as seasonal maintenance picked up.