SYDNEY (Reuters) – Oil prices fell on Monday on expectations of higher U.S. refinery production and after remarks by OPEC that it is ready to pump more oil if needed.
London Brent crude, currently seen as more representative of the world market, slid 60 cents to $77.04 a barrel by 0807 GMT, after easing 3 cents on Friday. U.S. crude for September traded 42 cents lower at $75.37.
The Organization of the Petroleum Exporting Countries is concerned about the potential impact of near-record oil prices on the world’s economy, but has seen little sign that higher energy costs have hit growth, the group’s president said on Sunday.
OPEC stands ready to pump more oil if needed, but it is not clear whether the group will need to boost output before the end of the year, OPEC President and United Arab Emirates Energy Minister Mohammed al-Hamli told Reuters in an interview on Sunday.
But analysts said OPEC’s comments are unlikely to have a lasting impact on oil prices as supply worries continue to loom.
“We have seen those comments from OPEC for the last three years and it seems like these are merely attempts to reassure the market that supply will be available,” said Gerard Burg, an oil and gas analyst at National Australia Bank.
“These comments does not mean that there is going to be a change in OPEC policies or a move to increase supply soon.”
Despite supply concerns and surging oil prices, OPEC has yet to relax supply curbs in place since last November. Global economies are proving resilient to surging energy prices and oil consumption has remained strong.
Economic growth in China, the world’s second-largest oil consumer, accelerated to 11.9 percent in the second quarter, an 11-1/2-year high, though Reuters calculations show apparent oil demand growth was more tepid at 2.1 percent in June.
Crude imports by China still rose nearly 20 percent in June from a year ago, while imports by South Korea, the world’s fourth-largest buyer, rose 3.8 percent in June.
Analysts said oil prices were also pulled down by a report which cited OPEC’s research division as saying that a fair price for both oil producers and consumers would be around
“A price of $60-$65 is appropriate for consumers and producers, because it boosts means of investment in the oil industry in light of growing demand for oil in the coming years,” state firm Kuwait Petroleum Corporation’s monthly newsletter quoted the head of OPEC’s research division as saying.
News of Chevron Corp. restarting a 200,000 barrel-per-day (bpd) crude distillation unit at its Los Angeles-area refinery in California also weighed on prices.
The recent gain in oil prices has been supported by rising demand in United States and a spate of refinery outages that have drained inventories in the world’s top consumer.
A U.S. government report last week showed gasoline stocks unexpectedly fell by 2.3 million barrels in the week to July 13.