Oil fell in London, erasing last week’s gain as Saudi Arabia said it’s pumping crude near a record pace, bolstering speculation that a global glut will persist.
Futures dropped as much as 1.2 percent. Saudi Arabia is producing almost 10 million barrels a day, Oil Minister Ali al-Naimi said on Sunday, adding he was optimistic about the market. U.S. companies are preparing to increase drilling activity later this year and building a “war chest” of uncompleted wells, according to Goldman Sachs Group Inc.
Oil has lost 13 percent from this year’s peak in February as U.S. crude stockpiles and output rose to the highest levels in more than three decades. Prices are unlikely to return to $100 a barrel because a surge would draw higher-cost producers to the market, said Mohammed Al-Madi, Saudi Arabia’s governor to the Organization of Petroleum Exporting Countries.