Investing.com - Crude oil futures turned higher during U.S. morning trade on Tuesday, bouncing off an eight-month low after Saudi Arabia’s oil minister said his country would not seek to raise output levels ahead of Thursday's meeting of the Organization of Petroleum Exporting Countries in Vienna.
Prices were lower during Asian and European trading hours as investors cut their exposure to riskier assets amid sustained concerns over the euro zone’s debt crisis.
On the New York Mercantile Exchange, light sweet crude futures for delivery in July traded at USD83.19 a barrel during U.S. morning trade, gaining 0.6%.
It earlier fell by as much as 1.7% to trade at USD81.11 a barrel, the lowest since October 6.
Oil prices hit the highest levels of the session after Saudi Arabia's Oil Minister Ali Naimi said his country would not ask for the Organization of Petroleum Exporting Countries to increase production levels at this week's meeting. The agency supplies nearly 40% of the world’s crude.
OPEC most recently said it was pumping 32.4 million barrels a day of oil, a level not seen since the summer of 2008 and 2.4 million barrels more than the official 30-million-barrel-limit agreed to at the last meeting in December.
Market analysts expect the oil group to keep output high as tightening sanctions reduce oil output in Iran. The country is OPEC's second-largest producer behind Saudi Arabia, which has boosted output to account for the decline in Iranian exports.
Iran and Venezuela have recently criticized other members of the cartel for producing more than the existing quota.
A potential loss of Iranian oil supplies has helped underpin strong gains in oil prices during late last year and the first quarter of this year.
But prices declined as the market took into account assurances from Saudi Arabia that it would make up for any supply shortfalls against the potential risk for the loss of oil from Iran.
According to a Platts survey of OPEC and oil industrial officials and analysts released on June 8, oil output in Iran fell to 3.25 million barrels per day in May, while Saudi Arabia’s rose 50,000 barrels to 10 million barrels, the highest since 1980.
Oil prices were down sharply earlier as risk assets came under renewed pressure after the initial optimism which greeted news that Spain had secured a bailout for its banks faded and investors began to focus on the details of the rescue package.
Spain is the fourth euro-zone nation to seek a rescue, after Greece, Portugal and Ireland. A financial crisis has gripped the country since 2008, when a real estate bust caused big losses for many banks.
Concerns about Spain’s banks have grown since Bankia, the country’s fourth-largest lender, said last month it needed EUR19 billion in state aid to shore itself up against bad loans.
Appetite for riskier assets was further weighed amid uncertainty over the outcome of a Greek general election on June 17, which could determine the course of the country’s future in the euro zone, as well as concerns over Italy’s fiscal health.
Meanwhile, Cyprus said Monday it urgently needed European financial aid to shore up its banking system, a step that would make it the fifth euro zone economy to seek help.
The Wall Street Journal reported that the size of any bailout for Cyprus would amount to no more than EUR3 to EUR4 billion.
There are worries that the region’s worsening sovereign debt crisis could trigger a broader economic slowdown that would curb demand for oil.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for August delivery declined 0.1% to trade at 97.67 a barrel, with the spread between the Brent and crude contracts standing at USD14.48.
London-traded Brent prices are down nearly 23% since hitting an intraday high of USD128.38 on March 1. Prices fell to USD95.65 a barrel on June 4, the lowest since January 26, 2011.
Prices were lower during Asian and European trading hours as investors cut their exposure to riskier assets amid sustained concerns over the euro zone’s debt crisis.
On the New York Mercantile Exchange, light sweet crude futures for delivery in July traded at USD83.19 a barrel during U.S. morning trade, gaining 0.6%.
It earlier fell by as much as 1.7% to trade at USD81.11 a barrel, the lowest since October 6.
Oil prices hit the highest levels of the session after Saudi Arabia's Oil Minister Ali Naimi said his country would not ask for the Organization of Petroleum Exporting Countries to increase production levels at this week's meeting. The agency supplies nearly 40% of the world’s crude.
OPEC most recently said it was pumping 32.4 million barrels a day of oil, a level not seen since the summer of 2008 and 2.4 million barrels more than the official 30-million-barrel-limit agreed to at the last meeting in December.
Market analysts expect the oil group to keep output high as tightening sanctions reduce oil output in Iran. The country is OPEC's second-largest producer behind Saudi Arabia, which has boosted output to account for the decline in Iranian exports.
Iran and Venezuela have recently criticized other members of the cartel for producing more than the existing quota.
A potential loss of Iranian oil supplies has helped underpin strong gains in oil prices during late last year and the first quarter of this year.
But prices declined as the market took into account assurances from Saudi Arabia that it would make up for any supply shortfalls against the potential risk for the loss of oil from Iran.
According to a Platts survey of OPEC and oil industrial officials and analysts released on June 8, oil output in Iran fell to 3.25 million barrels per day in May, while Saudi Arabia’s rose 50,000 barrels to 10 million barrels, the highest since 1980.
Oil prices were down sharply earlier as risk assets came under renewed pressure after the initial optimism which greeted news that Spain had secured a bailout for its banks faded and investors began to focus on the details of the rescue package.
Spain is the fourth euro-zone nation to seek a rescue, after Greece, Portugal and Ireland. A financial crisis has gripped the country since 2008, when a real estate bust caused big losses for many banks.
Concerns about Spain’s banks have grown since Bankia, the country’s fourth-largest lender, said last month it needed EUR19 billion in state aid to shore itself up against bad loans.
Appetite for riskier assets was further weighed amid uncertainty over the outcome of a Greek general election on June 17, which could determine the course of the country’s future in the euro zone, as well as concerns over Italy’s fiscal health.
Meanwhile, Cyprus said Monday it urgently needed European financial aid to shore up its banking system, a step that would make it the fifth euro zone economy to seek help.
The Wall Street Journal reported that the size of any bailout for Cyprus would amount to no more than EUR3 to EUR4 billion.
There are worries that the region’s worsening sovereign debt crisis could trigger a broader economic slowdown that would curb demand for oil.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for August delivery declined 0.1% to trade at 97.67 a barrel, with the spread between the Brent and crude contracts standing at USD14.48.
London-traded Brent prices are down nearly 23% since hitting an intraday high of USD128.38 on March 1. Prices fell to USD95.65 a barrel on June 4, the lowest since January 26, 2011.