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By Bloomberg

Crude traded near the lowest level in four days in London amid speculation the Organization of Petroleum Exporting Countries will refrain from cutting its production target on Friday.

Brent lost 0.2 percent after declining 2.6 percent on Wednesday. A fifth week of declines in U.S. crude inventories was overshadowed by Iraq signaling it will increase exports this month and Iran urging the group to make room for more production if sanctions are lifted. OPEC is forecast to keep its output target unchanged, according to all but one of 34 analysts and traders in a Bloomberg survey last month.

OPEC members have been pumping above their target for a year, swelling a global glut and hampering Brent’s recovery from a six-year low. Saudi Arabia has stood by its strategy of favoring market share over supporting prices after leading a group decision in November to maintain the collective production target. Saudi Arabian Oil Co. widened discounts on the crude grades it sells to Northwest Europe, it said Thursday.

“Supply remains the overriding issue which will constrain any moves up,” Michael Hewson, senior analyst at London-based CMC Markets Plc, said by phone. “The drop in prices is down to the fact that supply is not going to get cut.”

Brent for July settlement slipped 12 cents to $63.68 a barrel as of 1:33 p.m. local time on the London-based ICE Futures Europe exchange. The contract decreased $1.69 to $63.80 on Wednesday, the lowest close since May 28. The European benchmark crude was at a premium of $4.23 to West Texas Intermediate, the U.S. marker grade.

OPEC Output

WTI for July delivery dropped 19 cents to $59.45 a barrel in electronic trading on the New York Mercantile Exchange. The volume of all futures traded was about 41 percent below the 100- day average for the time of day.

OPEC, which supplies about 40 percent of the world’s oil, pumped 31.58 million barrels a day in May, exceeding its ceiling of 30 million barrels for a 12th consecutive month, according to data compiled by Bloomberg. The market is oversupplied by as much as 2.5 million barrels a day, Venezuela’s Energy Minister Asdrubal Chavez said in Vienna.

Iraq, the second-biggest producer in OPEC, will boost shipments by about 100,000 barrels a day this month, Oil Minister Adel Abdul Mahdi said Wednesday. Iran, which in three weeks faces a deadline for a deal on its nuclear program, can return output to pre-sanctions levels in a short time and wants the 12-member group to make room for increased supply, said Oil Minister Bijan Namdar Zanganeh.

U.S. Supplies

OPEC’s decision in November to leave the production target unchanged has helped to reduce the glut in oil markets, United Arab Emirates Energy Minister Suhail Mohammed Al Mazrouei said in Vienna.

In the U.S., crude stockpiles declined by 1.9 million barrels in the week through May 29, according to a report from the Energy Information Administration Wednesday. Supplies were projected to drop by 2.5 million barrels, according to a Bloomberg survey.

Production accelerated by 20,000 barrels a day to 9.59 million barrels a day, rising for a second week, the EIA said. That’s the highest level since January 1983, according to weekly data from the Energy Department’s statistical arm.

The nation’s output will continue growing as the price stabilizes, with shale still able to generate a 10 percent return at about $40 a barrel, ConocoPhillips Chief Executive Officer Ryan Lance told reporters in Vienna.

The world’s largest oil consumer sent a record volume of crude abroad in April with more cargoes bound for Asia and Europe and exports to Canada hitting an all-time high, Census Bureau data showed. Shipments rose 41 percent to average 586,379 barrels a day, the most in U.S. government data going back to 1920. The majority went to Canada.