Oil headed for the biggest weekly decline since March amid speculation OPEC will maintain its production target at Friday’s meeting in Vienna, leaving the market oversupplied.
Futures dropped as much as 1.1 percent in London, extending this week’s decline to 6 percent. Oil production is a sovereign right and shale isn’t a threat to the industry, Saudi Arabia Oil Minister Ali al-Naimi said in Vienna. His Kuwaiti counterpart said there may be a proposal for the group to raise its production limit.
Brent’s recovery from a six-year low in January has stalled as OPEC continues to pump into a global glut to force higher-cost producers to cut output. Saudi Arabia’s al-Naimi, who led a November decision not to reduce the quota, said he’s “100 percent satisfied” about the market, reported Al-Hayat, a London-based Saudi newspaper.
“The market hasn’t priced in very much for OPEC as the broad consensus is that nothing will change,” Olivier Jakob, managing director of Zug, Switzerland-based researcher Petromatrix GmbH, said by phone. “If there were to be a surprise there is more room to the downside.”
Brent for July settlement fell as much as 68 cents to $61.35 a barrel on the London-based ICE Futures Europe exchange and was at $61.57 at 9:47 a.m. London time. The European benchmark crude traded at a premium of $4.14 to West Texas Intermediate, the U.S. marker grade, compared with $5.26 at the end of last week.
WTI for July delivery slid as much as 74 cents, or 1.3 percent, at $57.26 a barrel in electronic trading on the New York Mercantile Exchange. It has decreased 4.6 percent this week, set to snap a record 11-week rally. The volume of all futures traded was about 27 percent less than the 100-day average for the time of day.
The Organization of Petroleum Exporting Countries, which supplies about 40 percent of the world’s oil, produced 31.58 million barrels a day in May, exceeding its target for a 12th consecutive month, data compiled by Bloomberg showed.
Iran’s Oil Minister Bijan Namdar Zanganeh said Friday he supports the restoration of production limits on members states. The minister, who wants OPEC to make room for increased production if global sanctions on the nation are eased, said Thursday the market has “serious oversupply.”
OPEC will keep its target of 30 million barrels a day unchanged, according to all but one of the 34 analysts and traders in a Bloomberg survey last month.
Twenty-two of 34 analysts and traders were bearish on WTI in a separate Bloomberg survey through Thursday. Seven were bullish while five were neutral.
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