Oil falls after biggest gain in 3 weeks as glut seen persisting
By Bloomberg
Oil fell after the biggest advance in three weeks as rising crude supplies from OPEC and the U.S. signaled a global glut will persist.
Futures slid as much as 1 percent in London, extending a second monthly loss in June. Production from the Organization of Petroleum Exporting Countries accelerated last month to the highest level since August 2012 as Iraq pumped at a record, according to a Bloomberg survey. U.S. crude inventories expanded by 1.9 million barrels last week, the industry-funded American Petroleum Institute was said to have reported Tuesday.
Oil’s recovery from a six-year low in January has stuttered amid speculation the price rally is spurring production and fueling the surplus. Iraq is joining Saudi Arabia in boosting output as OPEC members defend market share against higher-cost producers. Investors have also avoided risk assets amid Greece’s debt crisis.
“Cuts in the U.S. have the potential to be offset by increases from OPEC, particularly if we see more oil from Iran,” Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. “It’s not very good news for prices.”
Brent for August settlement declined as much as 65 cents to $62.94 a barrel on the London-based ICE Futures Europe exchange and was at $63.01 at 1:23 p.m. Singapore time. The contract climbed 2.6 percent on Tuesday, the most since June 9. The European benchmark crude traded at a premium of $4.34 to West Texas Intermediate, the U.S. marker grade.
Leap Second
WTI for August delivery dropped as much as 81 cents, or 1.4 percent, to $58.66 a barrel in electronic trading on the New York Mercantile Exchange. It fell 1.4 percent in June, paring the first quarterly gain in a year. Total volume was about 61 percent below the 100-day average.
Electronic trading was delayed because of the leap second, CME Group Inc. said. Pre-market trading started at 8:30 p.m. New York time on June 30, with normal trading beginning 15 minutes later for July 1 transactions.
OPEC, whose 12 members supply about 40 percent of the world’s oil, pumped 32.1 million barrels a day in June, up 744,000 a day from May, according to the Bloomberg survey of companies, producers and analysts. Iraqi output surged by 567,000 barrels to a record 4.39 million a day.
In Vienna, momentum built toward a historic nuclear deal as negotiators from Iran and five world powers gave themselves until July 7 to draft the text of a final accord after missing a June 30 deadline.
Iranian Exports
The Persian Gulf nation remains a long way off from selling more crude, according to Goldman Sachs Group Inc., Bank of America Corp. and Societe Generale SA. Its goal of boosting exports by 50 percent would require an extra 500,000 barrels a day of production, which the banks predicted will take six to 12 months as it revives aging oil wells.
Crude stockpiles in the U.S., the world’s largest oil consumer, shrank by 2.5 million barrels in the week ended June 26, based on the median forecast in a separate Bloomberg survey of 11 analysts before an Energy Information Administration report Wednesday. While supplies decreased the previous eight weeks to 463 million barrels, they’re still 84 million above the five-year average level for this time of the year.