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By Bloomberg

Oil declined as investors weighed whether the Organization of Petroleum Exporting Countries will leave its production quota unchanged when it meets Friday.

Futures slid as much as 0.7 percent in London. An increase in OPEC’s collective target would be a formal recognition that current output is above its 30 million barrel-a-day quota, Barclays Plc said, echoing comments by Morgan Stanley. U.S. crude inventories probably fell for a fifth week, a Bloomberg survey showed before a government report Wednesday.

Brent’s recovery from a six-year low in January is stalling on signs a global glut will persist as OPEC members pumped above their target for a 12th consecutive month. Saudi Arabia has defended its strategy of favoring market share over supporting prices after leading a group decision not to cut supply at a November meeting.

“We will have to see major concessions from others within OPEC before the Saudis will return to a more cooperative approach,” Michael McCarthy, a chief strategist at CMC Markets in Sydney, said by phone. “It’s pretty clear that the Saudis are asserting their authority within OPEC, with the group appearing to take on U.S. producers. I don’t think we’ll see anything significant out of this meeting.”

Brent for July settlement dropped as much as 44 cents to $65.05 a barrel on the London-based ICE Futures Europe exchange and was at $65.12 at 1:10 p.m. Singapore time. The contract climbed 61 cents to $65.49 on Tuesday. The European benchmark crude traded at a premium of $4.24 to West Texas Intermediate, the U.S. marker grade.

OPEC Quota

WTI for July delivery lost as much as 48 cents, or 0.8 percent, to $60.78 a barrel in electronic trading on the New York Mercantile Exchange. It gained $1.06 to $61.26 on Tuesday, the highest close since Dec. 9. The volume of all futures traded was about 68 percent below the 100-day average.

While OPEC is expected to leave its allocation unchanged, an increase is possible, according to Barclays. A quota expansion would confirm the group’s ambitions to defend market share, analysts including Michael Cohen said in a June 2 research note.

OPEC, which supplies about 40 percent of the world’s crude, pumped 31.58 million barrels a day in May, data compiled by Bloomberg showed. There’s some risk the quota will be raised, Morgan Stanley analysts including Adam Longson said in a June 1 report.

U.S. Supplies

OPEC’s June 5 summit in Vienna comes three weeks before a deadline for a deal on Iran’s nuclear program. The government in Tehran has said it can add almost 1 million barrels a day of production within six months of sanctions being lifted. It could boost oil exports by 400,000 barrels a day in the first months after signing an agreement, according to Bijan Khajehpour, the managing partner of Atieh International, a consultant in Vienna.

Saudi Oil Minister Ali al-Naimi said Monday its strategy is working as demand is picking up and supply is slowing. OPEC will keep its output target unchanged, according to all but one of 34 analysts and traders in a separate Bloomberg survey last month.

In the U.S., crude inventories probably decreased by 2.5 million barrels in the week ended May 29, according to the median estimate of nine analysts. Supplies were at 479.4 million through May 22, near the highest level in 85 years, based on monthly records compiled by the Energy Information Administration since 1920.

Stockpiles rose by 1.8 million barrels last week, the industry-funded American Petroleum Institute reported Tuesday, ForexLive said on its website.