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Crude oil declines on U.S. demand concerns, OPEC eyed

Published 06/06/2011, 03:55 AM
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Investing.com – Crude oil futures were down for a second day on Monday, dropping below USD100 a barrel, as worries over the pace of the U.S. economic recovery added to concerns over a slowdown in demand from the world’s largest user.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in July traded at USD99.72 a barrel during European morning trade, slumping 0.84%.     

It earlier fell to a daily low of USD99.63 a barrel. 

Official data released Friday showed that U.S. nonfarm payrolls rose by 54K in May, the smallest jobs gain in nearly a year and significantly below expectations for an increase of 169K.

The unemployment rate unexpectedly rose to 9.1% from 9.0% in April, the highest level in five months.

Total U.S. crude supplies rose to 373.8 million last week, the highest level since May 2009, underscoring demand concerns from the world’s largest crude oil consumer. 

Meanwhile, markets were awaiting this week's meeting in Vienna of the Organization of the Petroleum Exporting Countries to see whether the group decides to increase its current output quota. 

The world’s largest oil producer and exporter Saudi Arabia said it would push for an increase in supplies, but was likely to face opposition from fellow OPEC members.

Saudi Arabia’s oil minister Ali al-Naimi said in an industry conference in Singapore over the weekend that OPEC needed to increase production by “at least one million barrels a day”, while adding that the he was not happy with current prices.

However, Iran’s OPEC governor Muhammad Ali Khatibi said a move to boost output is "difficult to understand", in light of high inventories and the recent drop in oil prices.

Qatar’s oil minister Mohammed bin Saleh al-Sada said on Friday that there was “no noticeable urgency” for OPEC to raise its quota when it meets on June 8.
 
Elsewhere, on the ICE Futures Exchange, Brent oil futures for July delivery declined 0.82% to trade at USD115.16 a barrel, up USD15.44 on its U.S. counterpart.

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