Oil prices on Friday fell the most in 11 months in New York as Saudi Arabia said it expects OPEC and its partners to boost supplies later this year, easing restraints intact since early last year.
US futures were down 4 percent, the biggest drop since July 5 last year, after Saudi Arabian Minister of Energy, Industry and Mineral Resources Khalid al-Falih said the supply caps might be scaled back, although he added that no decision has been made.
The US$2.83 decline pushed the price to less than US$70 at the close of trading for the first time since May 8.
The potential for an OPEC policy change, following a tweet by US President Donald Trump complaining about high prices, scrambled the outlook for oil markets and undercut the stock prices of producers.
The S&P 500 Energy index dropped 2.7 percent.
“We’re starting to see growing concerns that producers could cut back on their output cuts,” Tradition Energy market research manager Gene McGillian said in a telephone interview. “Taking that into consideration, along with record US production levels, it’s triggered a nice amount of profit-taking.”
Explorers in the US shale patch, were this week seen resuming their expansion plans as they continue to find a home for their crude around the world.
US working oil rigs rose by 15 this week to 859, the highest level since March 2015 and the biggest weekly boost since February, Baker Hughes data showed.
“We’ve been having plenty of exports to kind of alleviate any sort of glut here,” Stratas Advisors lead oil analyst Ashley Petersen said in New York. “There seems to be just enough crude and it’s all finding a home to go to.”
Al-Falih made his pronouncement on the supply cuts at a meeting in Saint Petersburg, Russia, with Russian Minister of Energy Alexander Novak, who echoed the comments.
The two ministers plan to meet at least twice more before an OPEC gathering in Vienna next month, al-Falih said.
Oil has traded near a three-and-a-half-year high on concern about supply disruptions from Venezuela and Iran. The rally has sparked worries that demand might falter, and OPEC and its allies appear to be reacting to that idea with the first offer to boost output since January last year.
West Texas Intermediate for July delivery fell US$2.83 to settle at US$67.88 per barrel on the New York Mercantile Exchange. The contract lost 1.6 percent to US$70.71 on Thursday. Total volume traded was about 35 percent greater than the 100-day average.
Brent futures for July settlement fell US$2.35 to US$76.44 per barrel on the London-based ICE Futures Europe exchange, the first weekly drop in seven weeks.
The global benchmark crude traded US$8.55 above West Texas Intermediate for the same month, the biggest premium in more than three years.
Futures for September delivery fell 1.6 percent to 477.4 yuan per barrel in afternoon trading on the Shanghai International Energy Exchange. Prices were down 1.9 percent this week. The contract rose 0.1 percent to 485 yuan on Thursday.
Trump’s April 20 tweet gave voice to a concern held widely in the US and other consuming countries that oil’s rally from less than US$30 in early 2016 to more than US$70 in New York risked becoming a threat to global economic growth.
The world’s top oil trader, Vitol Group, said it would be near impossible to avoid US sanctions on Iran, suggesting that Trump’s attack on OPEC’s third-largest producer might have a bigger impact on the global crude market than many anticipate.
Wholesale gasoline slid 2.3 percent to US$2.18 per gallon, while heating oil lost 2.5 percent to US$2.21 per gallon and natural gas remained at US$2.94 per 1,000 cubic feet.
In other commodities, gold slipped 0.1 percent to US$1,303.70 per ounce, silver lost 0.8 percent to US$16.55 per ounce and copper fell 0.6 percent to US$3.08 per pound.
Additional reporting by AP
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