Oil dips below $66 amid OPEC nations' clashing views over supply policy

Venezuela and Iran write to OPEC urging unity against the US

Oil traded near $66 a barrel in New York amid signs OPEC nations may clash over production policy when they meet later this month.

Futures fell 0.5 percent on Friday and are headed for a third week of declines. The US was said to ask key producers to raise output to compensate for potential supply shortfalls, and Saudi Arabia and Russia have signaled they’re ready to increase. However, Venezuela and Iran have written to fellow OPEC members urging unity against American sanctions, according to letters seen by Bloomberg News.

The OPEC meeting may end in failure due to conflicting positions of member countries, according to Sanford C. Bernstein & Co. Crude had rallied to the highest level since November 2014 in late May but has receded since then on speculation the Organization of Petroleum Exporting Countries will ease production curbs. Meanwhile, US drillers continue to pump crude at a record pace.

“The views are so widely different among OPEC members that they’ll probably fail to reach an agreement at the meeting later this month,” said Will Yun, a commodities analyst at Hyundai Futures Corp. “Prices are likely to seesaw without any clear direction as uncertainties rise in the market.”

West Texas Intermediate for July delivery was at $65.63 a barrel on the New York Mercantile Exchange, down 32 cents, at 9:21 a.m. in London. The contract is 0.4 percent lower on the week. Total volume traded was about 24 percent below the 100-day average.

Putin-Prince Meeting
 

Brent futures for August settlement were 48 cents, or 0.6 percent, lower at $76.84 a barrel on the London-based ICE Futures Europe exchange, after gaining $1.96 on Thursday. The global benchmark traded at a $11.30 premium to WTI for the same month.

Futures rose 0.5 percent to 468.3 yuan a barrel on the Shanghai International Energy Exchange, after edging up 0.2 percent on Thursday.

With some members of OPEC resisting the Saudi-Russia proposal to ease output caps that have been in place since 2017, attention is also on a Moscow meeting between Russian President Vladimir Putin and Mohammed bin Salman, the powerful Saudi crown prince, at a World Cup soccer match on June 14. That’s only eight days before OPEC’s crucial Vienna gathering.

Trump Complaint

The output-boost request from the US, which is not part of the supply deal, was made after US retail gasoline prices surged to their highest in more than three years and President Donald Trump publicly complained about OPEC policy and rising prices. It also follows Washington’s decision to reimpose sanctions on Iran, putting the OPEC member’s crude exports at risk. Fellow producer Venezuela’s oil industry is also struggling with an economic crisis.

Oil-market news:

• OPEC’s members all benefited from their supply deal, but the rewards weren’t evenly divided. The group’s overall oil-export revenues climbed by 28 percent in 2017 to $578 billion, according to data released by it on Thursday.
• China’s crude oil imports fell 1.1 percent to 39.05 million tons in May, the General Administration of Customs in Beijing said. That’s down from a record set in April and lowest since February.