Oil prices extend decline as Saudi Arabia, Russia signal output boost
Oil prices headed for its longest run of losses since February as Saudi Arabia and Russia mull easing curbs on crude production as concerns grow over supply shortages.
Futures in New York traded down 1.6% from Friday’s close. There was no settlement Monday because of the US Memorial Day holiday and all trades will be booked Tuesday.
Saudi Arabia and Russia last week signalled they may restore some of the output halted as part of a deal between the Organization of the Petroleum Exporting Countries (Opec) to make up for potential losses from other members, most notably Venezuelan supply and Iran.
Crude earlier this month rose to the highest level in more than three years after US President Donald Trump decided to reimpose sanctions on Iran and as Venezuelan output continues to fall amid an economic and political crisis.
Goldman Sachs Group Inc. is maintaining its bullish view on prices, saying an output increase from Russia and Saudi Arabia would only offset involuntary production declines.
“Oil fell in a panic sell-off on expectations Saudi Arabia and Russia boosting output will loosen the balance between supply and demand,” Takayuki Nogami, chief economist at state-backed Japan Oil, Gas & Metals National Corp., said by phone from Tokyo. “Now the market is digesting that information.”
West Texas Intermediate (WTI) for July delivery fell as much as 3.1% before trading at $66.80 a barrel on the New York Mercantile Exchange as of 10.47am in Tokyo. Futures are headed for a 5th straight session of declines, the longest such stretch since 9 February. Prices dropped $2.83 to $67.88 on Friday, the biggest loss since 5 July.
Brent futures for July settlement added 22 cents, or 0.3, to $75.52 a barrel on the London-based ICE Futures Europe exchange. Prices on Monday lost $1.14 to $75.30. The global benchmark crude traded at a $8.70 premium to WTI for the same month.
Futures for September delivery traded at 463.7 yuan, little changed from a day earlier on the Shanghai International Energy Exchange. The contract dropped 3.1% to 462.8 yuan on Monday, when trading volume rose to the highest levels since the futures debuted on 26 March.
