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Oil falls as Saudi Arabia offers more crude - ASHARQ AL-AWSAT English Archive
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LONDON, (Reuters) – U.S. crude oil fell more than a dollar on Friday as Saudi Arabia began offering more oil to Asian refiners, easing worries about supply following an inconclusive OPEC meeting.

U.S. crude fell by $1.30 a barrel to $100.63, retreating from early gains.

ICE Brent for July delivery was 54 cents down at $119.03 a barrel at 1237 GMT, having risen to a high of $120.07 earlier, the highest since May 5.

Top oil exporter Saudi Arabia is offering more crude to Asian refiners in July, industry sources with direct knowledge of negotiations said on Friday, the first evidence it is taking steps to unilaterally raise supplies.

The country will also boost production in July to 10 million barrels per day, al-Hayat newspaper said on Friday.

This eased concern that supply may dip following a meeting of the Organization for Petroleum Exporting Countries that failed to reach agreement on raised production quotas.

“I would expect people to start to digest what happened during the meeting: it means OPEC has no longer a quota, no restraint on production and Saudi Arabia is doing that, offering more to Asian customers. This element today should lead to some pressure on prices,” Christophe Barret from Credit Agricole CIB said.

OPEC met on Wednesday and for the first time in about a decade failed to agree on output policy.

“Today we’re seeing a normalization, it’s back to reality,” Commerzbank analyst Carsten Fritsch said.

Merrill Lynch analysts piled into the debate, arguing in a note that a breakdown in cohesion in OPEC cannot be a bullish signal for oil prices in the medium term.

“OPEC’s position could come back to hurt the cartel as the high cost of energy is a key risk to growth. Our energy as a share of GDP indicator suggests energy prices is reaching maximum affordability for the global economy,” they said.

“Our economists believe that the high oil prices washed out the U.S. fiscal stimulus passed in December hampering the recovery in America. Similar negative effects can be observed in other oil consuming economies.”

CHINA DEMAND, POLITICAL TENSION

Strong demand from China, which saw a more than 20 percent year-on-year rise in May crude imports, supported prices. The world’s second largest buyer imported more than 5 million bpd for a fifth consecutive month in May.

“As we go through the second part of the year, there may be a constant upward revision on Chinese oil demand,” said Tokyo-based Mitsubishi Corp’s risk manager Tony Nunan.

Political tension in Libya, Syria and Yemen continued to support oil prices. NATO warplanes pummeled a town west of Libya’s capital, state media said soon after Western and Arab powers promised more than $1 billion to help rebels fighting to end Muammar Gaddafi’s four-decade rule.

In Syria, thousands fled into Turkey fearing a military assault, officials said, as the country braced for more violent protests against the rule of President Bashar al-Assad.

The latest reports of a government crackdown intensified international concerns over Syria’s handling of pro-democracy protests, inspired by uprisings across the Arab world.

Yemen’s President Ali Abdullah Saleh, 69, was burned on 40 percent of his body in an attack at his palace last Friday — injuries which, depending on the depth of wounds, could be fatal and would probably curb his ability to rule, said U.S. and Yemeni officials.

Asharq Al-Awsat

Asharq Al-Awsat

Asharq Al-Awsat is the world’s premier pan-Arab daily newspaper, printed simultaneously each day on four continents in 14 cities. Launched in London in 1978, Asharq Al-Awsat has established itself as the decisive publication on pan-Arab and international affairs, offering its readers in-depth analysis and exclusive editorials, as well as the most comprehensive coverage of the entire Arab world.

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