Oil falls 3 per cent on euro worry, Saudi OPEC view
Also pressuring prices, top exporter Saudi Arabia said OPEC may need to raise oil output targets at its Thursday meeting in Vienna.
With Brent crude down sharply from a 2012 peak above US$128 (RM406) a barrel in March, the Saudi position puts OPEC's top producer at odds with other cartel members that favour reduced production to stem a supply glut.
Crude futures reversed after rallying more than US$2 on the news that euro zone finance ministers o n Saturday agreed to lend Spain up to 100 billion euros (US$125 billion) to tackle the problems of debt-stricken banks.
But oil faded, the euro erased gains against the dollar and US stocks fell as investors fretted over the impact of the deal on public debt and whether Greece's elections on Sunday will deepen the region's crisis.
"While avoiding bank failures in Spain is a good thing, investors realise that the Italians will probably want help next, so it's not a surprise for crude to pull back," said Phil Flynn, an analyst at Price Futures Group in Chicago.
Brent July crude fell US$1.47 to settle at US$98 a barrel, after reaching US$102.21. Brent extended losses to US$96.48 in post-settlement trading, approaching the US$95.63 low for the year struck on June 4.
US July crude slumped US$1.40 to settle at US$82.70 a barrel, off its US$86.64 peak. A post-settlement drop to US$81.11 eclipsed the US$81.21 low for the year struck on June 4.
Brent and US crude fell for a third straight day.
Brent trading volume outpaced US crude turnover and both had dealings above their respective 30-day averages.
US RBOB gasoline and heating oil futures settled lower, but losses were limited by news that a recently commissioned 325,000-barrels-per-day (bpd) crude unit at Motiva Enterprises' Port Arthur, Texas refinery was expected to be shut for up to five months.
Crude prices received support from data showing China's crude imports rose to a record 25.48 million tonnes, or about 6 million bpd, in May, up 18.2 per cent from a year earlier.
But implied oil demand edged up only 0.4 per cent from a year before and only marginally from April.
Other data showed China's inflation, industrial output and retail sales all declined in May, sounding another note of caution about the global economy.
Saudi: higher output may be needed
With a contentious OPEC meeting looming, Ali al-Naimi, Saudi Arabia's oil minister, said OPEC may need to raise its oil output target for the second half of the year.
"Our analysis suggests that we will need a higher ceiling than currently exists," he said in an interview in the Gulf Oil Review.
Saudi Arabia has lifted crude oil production sharply to 10 million bpd, a 30-year high, in an effort to help bring prices down and help nurture a faltering global economy.
Iraq's oil minister, also serving as OPEC's president, signalled that the producer group could act to reduce a global supply glut but was unlikely to set country production quotas at the meeting.
Kuwait's oil minister said he believed a discussion about potential output cuts was most likely inevitable.
"With the recent price drop, consensus was emerging for a production cutback, certainly not an increase or talk of one," said John Kilduff, a partner at Again Capital LLC in New York.
Iran's nuclear dispute
Iran approaches the OPEC meeting facing tightening US-led sanctions and a European Union embargo on Iranian oil set for July as the dispute over Tehran's nuclear program continues.
The United States will exempt India, South Korea and five other economies from financial sanctions in return for significantly cutting purchases of Iranian oil.
Iran's top oil buyer China and Singapore did not receive waivers.
Iran's deputy negotiator said world powers were unprepared for the next round of talks over the nuclear issue and had failed to honour agreements reached in previous negotiations, Iranian media said on Sunday.
Iran and the six powers — the United States, France, Russia, China, Germany and Britain — will meet for a third time this year in Moscow on June 18-19 to discuss the nuclear issue after making little progress at their most recent meeting.
The UN's International Atomic Energy Agency said its separate talks with the Iranians on Friday were "disappointing", and resulted in no progress toward an agreement on allowing inspectors access to key facilities in Iran. — Reuters
