SINGAPORE (Reuters) – Oil slid towards $76 on Monday, as traders waited to see if top exporter Saudi Arabia will continue to back steady OPEC supply curbs, after weak U.S. jobs data raised concerns of a recession that could hit demand.
U.S. light crude fell 55 cents to $76.15 a barrel by 0850 GMT, after climbing 40 cents on Friday. London Brent crude shed 66 cents to $74.41 a barrel.
Ahead of its meeting in Vienna on Tuesday, most oil ministers in OPEC, which supplies more than a third of the world’s oil, have stuck to the line that current output was sufficient to meet demand.
But Saudi Oil Minister Ali al-Naimi has declined comment, after a report by Washington-based consultancy PFC Energy saying Saudi Arabian sources signaled OPEC may need to consider an output boost of up to 1 million barrels per day (bpd).
“Near-record spot prices, steep inventory draws and economic uncertainty would all be good reasons for OPEC to reverse its October 2006 production cuts at its meeting on September 11,” said Lehman Brothers in a research note. “But few observers, us included, believe that it will do so.”
Saudi Arabia told its customers in Asia it would keep its crude oil supplies steady for October from September levels, industry sources in Japan and South Korea said on Monday.
More than half of Saudi Arabia’s crude heads to Asia.
Saudi Arabia’s view is key to any OPEC decision. The kingdom pumped 8.65 million bpd of the cartel’s total August production of 30.37 million bpd, Reuters data shows. It also has the bulk of OPEC’s spare production capacity.
Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries have lowered output since last year, following deals to remove 1.7 million bpd, or about 6 percent of supply, from the market.
Economic troubles that some analysts fear could undermine future oil demand have kept a lid on an oil price rally to near the record high of $78.77 a barrel struck on August 1.
Payrolls in the United States shrank unexpectedly for the first time in four years last month, data showed on Friday, prompting concerns that credit market turmoil may drag the economy into a recession.