Oil on track for worst weekly performance in four months

Oil futures tumbled in American trade as the dollar index scaled November 14 highs following earlier data from the US, the world's largest energy consumer, and after reports that OPEC and allies are considering a production increase of one million bpd in the next June meeting. 

As of 06:42 GMT, US crude futures due on July 15 fell 4% to $67.88 a barrel from the opening of $70.71, while Brent futures due on July 15 fell 3% to $76.43 a barrel from the opening of $78.79, as the dollar index rose 0.44% to 94.19 from the opening of 93.77. 

US data

Earlier US data showed durable goods orders fell 1.7% in April, compared to a 2.7% rise in March, and missing expectations of a 1.3% drop, while core orders accelerated to 0.9% from 0.1%, beating forecasts of 0.5%. 

University of Michigan's final reading for the consumer sentiment survey came at 98.8 in May, same as the preliminary and the April reading and in line with forecasts. 

On Wednesday, the Energy Information Administration released its report on US crude stocks, showing a buildup of 5.8 million barrels in the week ending May 18, compared to a 1.4M drawdown in the previous reading, while analysts expected a 2.5M drop, with total stocks now mounting to 438.1 million barrels. 

Gasoline stocks rose 1.9 million barrels, while distillate stocks, including heating fuel, fell 1.0 million barrels. 

Oil ministers weigh in 

Saudi oil minister Khalid Al Falih and Russian energy minister Alexander Novak are leading an effort to possibly increase output levels to compensate for future shortages. 

Al Falih said in earlier remarks that Saudi Arabia is read to change policies and increase production gradually, asserting the importance of allaying concerns of a supply shortage after US sanctions on Iran and Venezuela. 

Falih expects higher global demand in the second half of 2018, with Iranian supplies expected to fall by 0.5 to 0.7 million bpd, while Venezuelan production is down 1 million bpd from early 2016 levels. 

Venezuelan president Nichols Maduro said the national oil company intends to raise output by 1 million bpd this year, with help from Russia, China, and OPEC if needed. 

OPEC secretary general Muhammad Barkindo said in earlier remarks that OPEC has begun talks on easing the supply limits, especially after criticisms from US president Donald Trump on OPEC's role in keeping prices high. 

OPEC is currently holding up a deal to cut global production by 1.8 million bpd, with an official deadline at December 2018, succeeding thereafter in achieving relative balance in the market and siphoning down global inventories.  

Baker Hughes, an oil services company, reported an increase of 4 rigs in the US oil rig counts last week to a total of 859 rigs, the highest since March 2015. 

US production jumped 27% from mid-2017, passing Saudi Arabia's 9.9 million bpd levels, and nearing Russia's 11 million bpd.