Brent oil snapped a two-day advance as Saudi Arabia maintained crude output at a record in May before OPEC meets this week to discuss its production policy.
Futures slid as much as 0.8 percent in London after rising 4.8 percent on Friday. Saudi Arabia pumped 10.25 million barrels a day, unchanged from April and the most in a monthly Bloomberg survey going back to 1989.
The Organization of Petroleum Exporting Countries will probably maintain its collective quota at 30 million barrels a day when it meets June 5 in Vienna, according to a separate survey last month.
Oil’s recovery from a six-year low in January is stalling amid speculation a global glut will persist.
OPEC, which pumps 40 percent of the world’s crude, is seen sticking with its strategy of favoring market share over supporting prices, while US supply remains near a record.
“Production is going to have to come down to prevent oil prices falling away,” Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone.
“Not only is Saudi Arabian output steady but we also saw U.S. production flicking up again. That’s why we’re constrained on the upside.”
Brent for July settlement fell as much as 53 cents to $65.03 a barrel on the London-based ICE Futures Europe exchange and was at $65.15 at 2:20 p.m. Singapore time.
The European benchmark crude traded at a premium of $5.36 to West Texas Intermediate, the U.S. marker grade.
WTI for July delivery declined as much as 56 cents, or 0.9 percent, to $59.74 a barrel in electronic trading on the New York Mercantile Exchange.
The contract gained 4.5 percent to $60.30 on Friday.
OPEC output increased 67,000 barrels to 31.579 million a day in May, according to the survey of oil companies, producers and analysts.
Production from Iraq, the second biggest of the group’s 12 members, accelerated by 197,000 barrels a day to a record 3.87 million, the survey shows.
Representatives of OPEC’s Economic Commission Board, which reviews the market before ministers meet in Vienna, confirmed the group’s prior outlook for 2015, projecting that the need for its crude will rise in the second half, said two delegates who asked not to be identified because the talks are private.
OPEC exceeded its collective target for a 12th consecutive month in May, according to data compiled by Bloomberg. Given the group is producing more than 31 million barrels a day, there is some risk that its output quota may be increased, Morgan Stanley analysts including Adam Longson said in a note Monday.
Speculators have tempered their crude wagers before the OPEC meeting.
With bearish bets on WTI falling at a faster pace than bullish holdings, the net-long position rose for the first time in three weeks, US Commodity Futures Trading Commission data for the seven days ended May 26 show.
Production in the US, the world’s biggest oil consumer, rose to 9.57 million barrels a day through May 22, according to the Energy Information Administration. That’s the highest level since January 1983.
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