Oil falls from five-month highs as Russia signals output increase
Oil prices fell on Tuesday, slipping from five-month highs as Russian comments indicating a possible easing from its production-cutting deal with OPEC overshadowed the prospect that violence in Libya could further tighten global markets.
A U.S. threat to slap tariffs on hundreds of European goods and a downgrade by the International Monetary Fund in its global economic growth forecasts took the steam out of the rally in global equities and also added to concerns that a slowdown this year will hit fuel consumption and prevent crude prices from rising even higher.
Supply curbs led by the Organization of the Petroleum Exporting Countries and allies like Russia have underpinned a more than 30 percent rally this year for Brent crude, despite downward pressure from fears of an economic slowdown and weaker demand.
Brent fell 32 cents to $70.78 a barrel by 12:16 p.m. EDT (1616 GMT) after hitting $71.34, its highest since November. U.S. crude was down 37 cents to $64.03 a barrel after also reaching a five-month high of $64.79.
"Several feedback loops are about to start spinning that stand in the way of a prolonged oil rally," said Norbert Ruecker of Swiss bank Julius Baer.
"Russia already signalled its willingness to raise oil output from June. Fuel remains costly in emerging markets, with soft currencies adding to high oil prices."
Russia, a participant in the OPEC-led supply cuts that expire in June, signalled on Monday it wants to raise output when it next meets with OPEC because of falling stockpiles.
On Tuesday, President Vladimir Putin said Russia did not support an uncontrollable rise in oil prices and that the current price suited Moscow.
"We are ready for cooperation with OPEC in decision-making ... But whether it would be cuts, or just a stoppage at the current level of output, I am not ready to say," Putin told an Arctic conference in St. Petersburg.
U.S. sanctions on Iran and Venezuela have deepened the OPEC supply cut and concern has grown this week about the stability of Libyan output. The OPEC member pumps around 1.1 million barrels per day, just over 1 percent of global supply.
The eastern Libyan National Army forces of Khalifa Haftar - a former general in ousted strongman Muammar Gaddafi`s army - which seized the sparsely populated but oil-rich south earlier this year, closed in on the internationally recognised government in Tripoli, with casualties from the battle for Libya`s capital mounting on Tuesday.
The Libyan state oil firm NOC met with oil operating firms to discuss security at oil fields and allow production to continue, a company statement said on Tuesday.
Rising U.S. crude production and inventories also weighed on the market.
U.S. crude production was expected to rise 1.43 million bpd in 2019 to average 12.49 million bpd, the U.S. Energy Information Administration (EIA) said on Tuesday, up from its previous forecast for a rise of 1.35 million bpd.
U.S. crude stockpiles were forecast to have risen 2.3 million barrels last week, the third straight weekly build.
The American Petroleum Institute, an industry group, issues its supply report at 2030 GMT, ahead of Wednesday`s official figures.
"I think what`s really giving the market pause is that nobody can actually come close to predicting what`s going to happen in tonight`s API report," Phil Flynn, analyst at Price Futures Group in Chicago.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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