Oil falls ahead of expected OPEC deal to raise supply

Reuters  |  NEW YORK 

By Andres Luz

The market was contending with exactly how much output will change as the Organization of the Petroleum Exporting Countries, which holds its biannual meeting on Friday, is widely expected to agree to pump more, possibly supported by some other producers outside OPEC, including

"I think it's going to be an increase, but it's just a matter of what's the magnitude," said Dominick Chirichella,

Brent crude dropped $1.26, or 1.7 percent, to $73.48 a barrel by 11:38 a.m. EDT (1538 GMT) after earlier hitting a session low of $72.94.

U.S. Intermediate crude for August delivery, the new front month, fell 22 cents to $65.49, after earlier trading at a high of $65.89.

WTI briefly turned positive after information provider said crude inventories at the key Cushing, hub were expected to have dropped by 2.3 million barrels in the week since Tuesday, traders said, alleviating some concerns that surging U.S. production would outstrip demand.

Brent reached a 3-1/2-year high above $80 a barrel last month but has fallen steadily in recent weeks as Saudi Arabia, de facto of OPEC, has signalled it intends to raise production to stabilise prices.

had been expected to oppose any rise in crude output, but it has now signalled it may support a small increase.

"We need to release supply to the market," Saudi Arabian Minister told reporters in "How much do we need? ... Around 1 million (barrels per day) probably."

Falih said the market had now rebalanced and his aim was to prevent a shortage of crude in future that could squeeze the market.

OPEC member Ecuador's said he expects an increase of about 600,000 bpd.

Harry Tchilinguirian, at French BNP Paribas, told Global Oil Forum he expected OPEC and to agree a compromise that would see a small increase in global

"It would seem that an aggregate increase in production for OPEC+ of between 500,000 bpd and 1 million bpd is the range that is being considered," Tchilinguirian said.

OPEC, together with other key producers including Russia, started withholding output in 2017 to prop up prices, but a tightening market has led to calls by consumers for more supplies.

(Additional reporting by in Singapore and Christopher Johnson in London; Editing by and David Evans)

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First Published: Thu, June 21 2018. 21:42 IST