Oil prices fall as supply from top three producers set to rise

OPEC and its partners made a decision to extend its production cuts till the end of 2018 in Vienna on November 30, as the oil cartel and its allies step up their attempt to end a three-year supply glut that has savaged crude prices and the global energy industry.

Oil traders were active on Monday despite the Memorial Day holiday and the closure of USA stock and bond markets.

Reports surfaced indicating that key OPEC members are going to meet Sunday.

Brent crude futures fell 68 cents to $74.62 a barrel, a 0.9 percent loss, by 12:11 p.m. EDT (1611 GMT).

Amid concerns the price rally has gone too far, Saudi Arabia and Russian Federation are discussing raising OPEC and non-OPEC oil output by around 1 million bpd, sources told Reuters on May 25.

Parker said that while Saudi Arabia had a “very strong vested interest” in keeping crude futures at around $70 to $80 a barrel, a move toward $100 a barrel could soon occur in the event of a “complete collapse” in Venezuelan crude production.

Traders will have to wait until Thursday to see the latest data from the Energy Information Administration on USA petroleum supplies, which will be released a day later than usual because of Monday’s holiday.

The spread between Brent and USA crude CL-LCO1=R stands at almost $9 a barrel, its widest since March 2015 because of the depressed price of US crude compared with Brent.

The market on Tuesday sold off in advance of a June 22 OPEC meeting in Vienna, where it is said the cartel will decide to begin exiting its supply cutting agreement that has been active since January of 2017; West Texas Intermediate posted a fifth straight day of losses, down $1.15 at $66.73 per barrel.

Since past year, oil producing countries have cut back production in an attempt to offset dipping prices, withholding as much as 1.8 million barrels per day.

Oil earlier in May rose to a 3 ½-year high after US President Donald Trump chose to renew sanctions on Iran and as plunging Venezuelan output fuelled concerns over disruptions.

In China, Shanghai crude oil futures tumbled by 4.5 per cent to 459 yuan ($71.83) per barrel.

“Market participants will closely watch how quickly any such measure is implemented and whether it will go beyond just balancing the output drop from Venezuela”.

“We agreed that the current oil market anxiety is a reflection of the geopolitical situation and not a result of any oil supply shortage”, Al-Falih said on his Twitter account.

According to the CFTC, hedge funds and money managers reduced their net long position in the six major petroleum futures and options contracts in each of the five weeks to May 22 by a total of 108 million barrels.