Oil Prices Slip On Expectations of Higher Supply
Oil prices fell on Wednesday on increasing signs that Saudi Arabia and other big crude producers may raise supply to balance a surge in demand during the peak U.S. summer driving season.
Global oil benchmark Brent crude climbed above $80 a barrel last month, but prices have eased since then on talk of higher output by the Organization of the Petroleum Exporting Countries.
Brent was down 35 cents a barrel at $75.03 by 1320 GMT. U.S. light crude was 30 cents lower at $65.22.
India's oil minister said on Wednesday his Saudi counterpart had told him the kingdom was revisiting its policy of cutting production, which has been a major factor in supporting prices in recent months.
The U.S. government has unofficially asked Saudi Arabia and some other OPEC producers to increase output, sources told Reuters on Tuesday.
OPEC and Russia will meet on June 22/23 to decide whether to increase production following a fall in global inventories as world demand outstrips supply.
The producers have been considering a supply increase of up to 1 million barrels per day, sources told Reuters.
"The oil price is being driven by OPEC and views on how much and how quickly 'OPEC plus' will raise output," Energy Aspects analyst Virendra Chauhan said.
Balancing expectations of higher OPEC output has been falling Venezuelan oil production.
Venezuela has the world's biggest oil reserves and is a key supplier to American fuel markets but its output has been hampered by inadequate investment, mismanagement and a confrontation with the United States that has led to sanctions.
Three sources have told Reuters Venezuelan state firm PDVSA is considering declaring force majeure on some exports, after plummeting output and tanker bottlenecks at ports.
U.S. sanctions on Iran also threaten to reduce oil exports from the OPEC producer.
"It's a tug of war between the loss of supply from Venezuela and Iran and the potential output increase from OPEC and U.S. shale," said Tony Nunan, risk manager at Mitsubishi Corp. "$80 is a temporary ceiling for oil until we hear from OPEC."
Industry data from the American Petroleum Institute showed on Tuesday that U.S. crude inventories fell by 2 million barrels last week, compared with analysts' expectations for a draw of 1.8 million barrels.
Investors awaited official inventories data from the U.S. Energy Department's Energy Information Administration at 1430 GMT.
By Christopher Johnson, Additional reporting by Florence Tan in Singapore and Osamu Tsukimori in Tokyo