MW: Crude falls on expectation OPEC will not cut production
Crude-oil futures fell Tuesday on expectations that the Organization of Petroleum Exporting Countries will not cut production quotas at a Thursday meeting.
Losses in oil, however, were limited by data that showed a jump in U.S. consumer confidence.
Crude for July delivery fell 24 cents, or 0.4%, to $61.43 a barrel on the New York Mercantile Exchange. It fell to $59.53 earlier, moving below $60 for the first time since May 20. The loss came after it rallied more than 8% last week, mainly boosted by a weaker dollar.
"Further comments that there will not be a production cut at this week's OPEC meeting may be weighing on oil prices," said Brenda Sullivan, an analyst at Sucden Financial Research.
Saudi Arabia's Oil Minister Ali Naimi Tuesday reiterated his desire for OPEC to "stay the course" with its production and called for better compliance with past output reductions, according to Dow Jones Newswires.
OPEC in April raised its oil production for the first month since September, as some member countries took advantage of a recent rally in oil prices, data from the International Energy Agency showed.
Countries such as Iran, Nigeria and Kuwait raised their production. Saudi Arabia also increased its output, although the country's production still remained within the quota.
The cartel's compliance to its production cuts, totaling 4.2 million barrels a day since September, fell below 80% in April from March's 83%.
"There are going to be some members who are more compliant with the target, who are going to be quite upset with their colleagues who have increased their production in April," said Kevin Saville, managing editor at Platts Global Alert.
"What's going to happen is behind closed doors, you'll have members saying that we need to recommit to the cuts that we implemented at the end of last year," he added, referring to the upcoming meeting.
Reducing losses
Crude reduced its losses in mid-morning trading Tuesday after a reading on U.S. consumer confidence jumped to 54.9 in May from an upwardly revised 40.8 in April as expectations for jobs improved, the Conference Board reported Tuesday.
The gain is the fourth-largest in the 32-year history of the survey, and the index is at its highest level in eight months. Economists were expecting the index to hit 43. See Economic Report.
Also in energy trading, June-reformulated gasoline slid 2.04 cents, or 1.1%, to $1.8204 a gallon, and June heating oil dropped slightly to $1.5315 a gallon.
Natural gas for June delivery fell 3.6 cents, or 1%, to $3.479 per million British thermal units.
In oil exchange-traded funds, the United States Oil Fund slid 0.2% to $33.63.
In energy equities, the Amex Oil Index rose 0.8% to 938.27. The Amex Natural Gas Index fell 0.1% to 413.94. The Philadelphia Oil Service Index gained 1.4% to 163.68.
