By Claudia Assis and Virginia Harrison, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures declined Tuesday, extending the previous session’s losses, as global growth concerns stoked fears about energy demand and as investors awaited word on production levels from the Organization of the Petroleum Exporting Countries.
Light, sweet crude oil for July delivery CL1N -0.40% fell 80 cents, or 0.8%, to $98.21 a barrel on the New York Mercantile Exchange.
On Monday, oil settled at its lowest level since May 23, as recent lackluster economic data reignited jitters about global energy appetites.
Energy markets awaited the outcome of OPEC’s meeting, which will begin Wednesday in Vienna.
Most analysts expect the cartel to raise output, but only slightly. Read more about OPEC’s upcoming meeting.
“We expect the overall stance of most OPEC ministers to remain highly cautious, although price aspirations have increased by some $25 per barrel since the last meeting,” analysts at Barclays Capital said.
The analysts argued that market fundamentals warrant higher underlying production and not just a simple recalibration of existing quotas, adding that OPEC should recalibrate quotas “closer to actual output levels and provide a clear signal of more actual output to come.”
“However, most OPEC members remain in a cautious price-defensive mode, and are likely to be attracted by the more headline-friendly quota adjustment rather than by the explicit signaling of a change in actual output,” Barclays Capital said.
Reuters reported Tuesday that Kuwait’s oil minister expects the cartel to increase output as demand from Asia heightens the need for more supply. Read more about the output report.
Prices would likely fall fast if OPEC “embraces a possible Saudi proposal to put through additional barrels over and above the 1.4 million excess that already exists over the official quota,” analysts at MF Global said in a note to clients Tuesday.
“We will have to wait and see what happens, but there are reports that the Saudis have increased production going into the meeting and thus may be flexing their muscles in advance of a decision,” they added.
Other energy products bucked oil’s downward trend, with gasoline for July delivery RB1N +0.99% adding 2 cents, or 0.6%, to $2.97 a gallon.
July natural gas advanced less than a penny to trade at $4.83 per million British thermal units.
