Benchmark Brent crude LCOc1 was down 60 cents a barrel at $74.14 by 0725 GMT. U.S. light crude CLc1 was 35 cents lower at $65.36.
Brent reached a 3-1/2-year high above $80 a barrel last month but has fallen steadily in recent weeks as Saudi Arabia, de facto leader of OPEC, has signaled it intends to raise production to stabilise prices.
The Organisation of Petroleum Exporting Countries holds its biannual meeting in Vienna on Friday and is widely expected to agree to pump more, possibly supported by some other producers outside OPEC, including Russia.
Iran had been expected to oppose any rise in crude output, but it has now signaled it may support a small increase.
“It would seem that an aggregate increase in production for OPEC+ of between 500,000 barrels per day (bpd) and 1 million bpd is the range that is being considered,” Harry Tchilinguirian, head of oil strategy at French bank BNP Paribas, told Reuters Global Oil Forum.
Stephen Innes, head of trading for Asia-Pacific at futures brokerage OANDA, agreed: “There appears to be an air of confidence that this deal will move through.”
OPEC, together with other key producers including Russia, started withholding output in 2017 to prop up prices, but a tightening market has led to calls by consumers for more supplies.
Looming over all financial markets is an escalating trade dispute between the United States and its other major trading partners, particularly China.
Washington and Beijing have both threatened punitive tariffs on each other’s exports, including U.S. crude oil.
China on Thursday canceled a trip to West Virginia by executives from China Energy Investment Corp to discuss a planned $83.7 billion investment in the state and called Washington’s behavior “capricious.”
In another escalation, India on Thursday joined China and the EU by increasing duties on various commodities imported from the United States.
But oil prices have found some support from global demand, which has been increasing strongly this year.
U.S. refineries processed a seasonal record of 17.7 million bpd of crude oil last week, the Energy Information Administration (EIA) said on Wednesday. [EIA/S]
Commercial U.S. crude inventories dropped by 5.9 million barrels in the week to June 15, to 426.53 million barrels C-STK-T-EIA, the EIA said. (Reuters)