Oil Lower After Saudis Says it Will Increase Production

Oil prices on Friday gave up gains made earlier this week after the world’s top crude exporter Saudi Arabia said it stood ready to raise output to new record highs, potentially adding to a global supply glut.

A stronger U.S. currency against the euro also weighed on the dollar-denominated oil market after the International Monetary Fund pulled out of stalled debt talks with Greece.

Saudi Arabia said it was in talks with Indian buyers to supply additional crude, meaning the Middle Eastern exporter could top its record of 10.3 million barrels per day produced in May.

Additional production in an already oversupplied market would further depress prices that are around 45 percent below highs reached a year ago.

Brent crude LCOc1 was trading 55 cents lower at $64.56 a barrel at 9.45 a.m. EDT, while U.S. light crude CLc1 was down 62 cents at $60.15.

“Prices continue to grind lower, but improving demand prospects and the rig count data later today seem to slow the decline,” said Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt.

The International Energy Agency said on Thursday it expected world oil demand to rise more than expected this year on the back of economic recovery and a relatively cold winter in the northern hemisphere.

However, analysts at JBC Energy said this growth was focused on the first half of the year, meaning demand would tail off until the end of the year.

via Reuters

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