Oil halts advance as Saudis pump at record before OPEC meeting

BEN SHARPLES

LONDON (Bloomberg) -- Brent oil snapped a two-day advance as Saudi Arabia maintained crude output at a record in May before OPEC meets this week to discuss its production policy.

Futures slid as much as 0.8% in London after rising 4.8% on Friday. Saudi Arabia pumped 10.25 MMbopd, unchanged from April and the most in a monthly Bloomberg survey going back to 1989. The Organization of Petroleum Exporting Countries will probably maintain its collective quota at 30 MMbopd when it meets June 5 in Vienna, according to a separate survey last month.

Oil’s recovery from a six-year low in January is stalling amid speculation a global glut will persist. OPEC, which pumps 40% of the world’s crude, is seen sticking with its strategy of favoring market share over supporting prices, while U.S. supply remains near a record.

“Production is going to have to come down to prevent oil prices falling away,” Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. “Not only is Saudi Arabian output steady, but we also saw U.S. production flicking up again. That’s why we’re constrained on the upside.”

Brent for July settlement fell as much as 53 cents to $65.03/bbl on the London-based ICE Futures Europe exchange and was at $65.20 at 12:01 p.m. Sydney time. The European benchmark crude traded at a premium of $5.29 to West Texas Intermediate, the U.S. marker grade.

WTI for July delivery declined as much as 56 cents, or 0.9%, to $59.74/bbl in electronic trading on the New York Mercantile Exchange. The contract gained 4.5% to $60.30 on Friday. The volume of all futures traded was about 47% below the 100-day average.