CN:Oil falls to near $98 in Europe amid signs OPEC ready to raise production quota
Vienna.
By early afternoon in Europe, the benchmark oil contract for July delivery was down 90 cents to $98.19 a barrel in electronic trading on the New York Mercantile Exchange. The contract added 8 cents to settle at $99.09 on Tuesday.
In London, Brent crude for July delivery was down 66 cents to $116.12 a barrel on the ICE Futures exchange.
Investors will be closely watching the outcome of a meeting later Wednesday of the Organization of Petroleum Exporting Countries, a cartel that controls about 40 per cent of global crude output.
OPEC leaders have been split this week over whether they should raise production. Saudi Arabia, the group's biggest supplier, has supported a price between $70 and $80 per barrel while Iran, the second-largest producer in OPEC, is against any output hike.
"Suggestions of a quota increase of between 1 million and 1.5 million barrel per day now appear likely," Ritterbusch and Associates said in a report.
With OPEC members already pumping out 1.4 million barrels a day over their established quotas, a readjustment of the assigned amounts would be welcomed by markets even if it did not translate into a real output increase.
"In the long term, OPEC would gain credibility by an increase in quotas," said analysts at Commerzbank in Frankfurt. "Although this would only have a symbolic significance, it could weigh on the price of oil in the near term, especially given the dampened market sentiment and weak economic data from the U.S."
A surprisingly large fall of U.S. crude stockpiles provided a floor for prices.
The American Petroleum Institute said late Tuesday that crude inventories fell 5.5 million barrels last week, more than the drop of 1.5 million barrels predicted by analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos.
Inventories of gasoline declined 161,000 barrels last week while distillates rose 1.8 million barrels, the API said.
The Energy Department's Energy Information Administration reports its weekly supply data — the market benchmark — later Wednesday.
In other Nymex trading in July contracts, heating oil fell 2.77 cents to $3.0493 a gallon and gasoline dropped 2.63 cents to $2.9656 a gallon. Natural gas futures slid 4.8 cents to $4.783 per 1,000 cubic feet.
