Crude Down as Saudis Said to be Revisiting Oil Cut Policy

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U.S. West Texas Intermediate (WTI) crude futures recovered some earlier losses to trade 25 cents lower at $65.71.

In similar fashion, the metal for delivery in July contracts was trading higher by Rs 32, or 0.73 per cent to Rs 4,387 per barrel in 272 lots.

On Friday, Opec's third-largest producer Iran criticised a United States request that Saudi Arabia pump more oil to cover a drop in Iranian exports and predicted that Opec would not heed the appeal.

U.S. crude stockpiles decreased by 2.03 million barrels last week, while the hoard at the key storage hub in Cushing, Oklahoma, fell by 1.04 million barrels, the industry-funded API was said to report.

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The surge in U.S. production has pulled down U.S. WTI crude into a steep discount versus Brent to more than $11 per barrel, its steepest since 2015.

Ministers from the Organization of the Petroleum Exporting Countries and other participants in the output agreement meet in Vienna on June 22-23 to decide policy. "The Saudis need the US on board with that campaign, so placating Washington with cheaper gasoline prices is a small price to pay".

"Nevertheless, growing prospects for an increase in production from the "OPEC Plus" and rising oil output from the US will cap price gains".

The U.S. government had also unofficially asked Saudi Arabia and some other OPEC producers to raise output a day before Washington slapped new sanctions on Tehran. USA production according to the latest report from the Department of Energy has increased to 10.8 million barrels per day.

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Investors are waiting for the official inventories report to be issued by the U.S. Energy Department's Energy Information Administration at 1430 GMT.

An economic crisis fed by the country's political instability has limited global supply, helping the Organisation of the Petroleum Exporting Countries (OPEC) hit its target for reduced output faster than expected.

The huge increase in production in the U.S.is capping prices and increasing demand for USA crude oil outside the United States. According to some analyses, U.S. consumers are paying about a quarter million dollars more per day for gasoline than they were previous year, dampening some of the impacts of U.S. President Donald Trump's tax reform. Market participants are also anticipating a softening in supply limits from OPEC and Russian Federation at their meeting on June 22, to offset supply outages in Venezuela. "The U.S. tried it last time against Iran, but oil prices got to $140 a barrel".

Oil rose by almost $1 a barrel yesterday, lifted by concern about a steep drop in exports from Venezuela, although surging USA production kept gains in check.

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