SINGAPORE: Brent oil fell on Wednesday, June 8, hovering around $116 a barrel, ahead of an OPEC meeting where members are expected to agree to raise global supplies to rein in high prices that have weighed on growth and stoked inflation in the United States, Europe and Asia.
Dollar weakness limited the fall after U.S. Federal Reserve Chairman Ben Bernanke said growth in the world's largest economy had slowed.
Brent crude dropped 70 cents to $116.08 a barrel by 0455 GMT, erasing some of the gains from the previous session. U.S. crude eased 45 cents to $98.64 a barrel.
Regardless of OPEC's decision, top oil exporter Saudi Arabia plans to pump another 500,000 barrels a day (bpd) this month to reach at least 9.5 million bpd, its highest output for three years, a senior Gulf industry official familiar with Saudi oil policy told Reuters.
The kingdom, the biggest producer in OPEC, wants the organization to lift formal output limits for the first time since 2007 to show consumer countries that it recognises the danger to the economy from energy inflation.
Saudi and its Gulf Arab allies want OPEC to at least close the 1.4 million bpd gap between the producer group's two-and-a-half year old official production target of 24.8 million bpd and actual output, estimated by OPEC in April at 26.2 million bpd.
"We think that the likely OPEC announcement of a 1.5 million bpd increase in production quotas will offer moderate pressure to trade initially but also think that it has already been priced in," said Tom Pawlicki, analyst at MF Global Research.
Riyadh hopes its extra supplies will put an end to oil's sharp rally, driven by strong demand growth, Arab unrest.
''
The dollar edged up from a one-month low against a basket of major currencies, but was under pressure on Bernanke's comments and after a senior Chinese currency regulator warned of the risk of excessive dollar holdings.
"These (oil) prices are being driven by the U.S. dollar," said Jonathan Barratt, managing director of Commodity Broking Services. "The weak dollar-long commodity trade is entrenched regardless of what the fundamentals are."
A technical analysis by Reuters analyst Wang Tao showed Brent oil prices facing resistance at $118 per barrel, which signals neutral so long as oil stays above $113.60 per barrel. U.S. oil was biased to fall to $97.50, Tao said. [
The U.S. government raised its world oil demand forecast for 2011 on expectations Japan and other countries will need more crude to generate electricity, a surprise move that adds pressure on OPEC to boost production.
But there are still worries about mounting debt in the world's largest economy and an idea once confined to the fringes is seeping into its mainstream -- that a brief U.S. default might be an acceptable price to pay if it forces the White House to deal with runaway spending.
Weak economic data and sluggish oil demand from the U.S., the world's largest consumer of oil, have kept a lid on prices.
U.S. crude stocks slipped 5.5 million barrels in the week ended June 3, data from the American Petroleum Institute showed on Tuesday, far exceeding the average analyst forecast for a drop of 300,000 barrels.
The U.S. Energy Information Administration will issue its weekly inventory data later on Wednesday.
Analysts expected U.S. crude oil inventories to have fallen 300,000 barrels last week, while gasoline stocks climbed 1 million barrels, according to a Reuters poll. - Reuters
Dollar weakness limited the fall after U.S. Federal Reserve Chairman Ben Bernanke said growth in the world's largest economy had slowed.
Brent crude dropped 70 cents to $116.08 a barrel by 0455 GMT, erasing some of the gains from the previous session. U.S. crude eased 45 cents to $98.64 a barrel.
Regardless of OPEC's decision, top oil exporter Saudi Arabia plans to pump another 500,000 barrels a day (bpd) this month to reach at least 9.5 million bpd, its highest output for three years, a senior Gulf industry official familiar with Saudi oil policy told Reuters.
The kingdom, the biggest producer in OPEC, wants the organization to lift formal output limits for the first time since 2007 to show consumer countries that it recognises the danger to the economy from energy inflation.
Saudi and its Gulf Arab allies want OPEC to at least close the 1.4 million bpd gap between the producer group's two-and-a-half year old official production target of 24.8 million bpd and actual output, estimated by OPEC in April at 26.2 million bpd.
"We think that the likely OPEC announcement of a 1.5 million bpd increase in production quotas will offer moderate pressure to trade initially but also think that it has already been priced in," said Tom Pawlicki, analyst at MF Global Research.
Riyadh hopes its extra supplies will put an end to oil's sharp rally, driven by strong demand growth, Arab unrest.
''
The dollar edged up from a one-month low against a basket of major currencies, but was under pressure on Bernanke's comments and after a senior Chinese currency regulator warned of the risk of excessive dollar holdings.
"These (oil) prices are being driven by the U.S. dollar," said Jonathan Barratt, managing director of Commodity Broking Services. "The weak dollar-long commodity trade is entrenched regardless of what the fundamentals are."
A technical analysis by Reuters analyst Wang Tao showed Brent oil prices facing resistance at $118 per barrel, which signals neutral so long as oil stays above $113.60 per barrel. U.S. oil was biased to fall to $97.50, Tao said. [
The U.S. government raised its world oil demand forecast for 2011 on expectations Japan and other countries will need more crude to generate electricity, a surprise move that adds pressure on OPEC to boost production.
But there are still worries about mounting debt in the world's largest economy and an idea once confined to the fringes is seeping into its mainstream -- that a brief U.S. default might be an acceptable price to pay if it forces the White House to deal with runaway spending.
Weak economic data and sluggish oil demand from the U.S., the world's largest consumer of oil, have kept a lid on prices.
U.S. crude stocks slipped 5.5 million barrels in the week ended June 3, data from the American Petroleum Institute showed on Tuesday, far exceeding the average analyst forecast for a drop of 300,000 barrels.
The U.S. Energy Information Administration will issue its weekly inventory data later on Wednesday.
Analysts expected U.S. crude oil inventories to have fallen 300,000 barrels last week, while gasoline stocks climbed 1 million barrels, according to a Reuters poll. - Reuters
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