Azernews.Az

By Bloomberg

Oil resumed its decline as Iran said OPEC production may hit a record after sanctions on the country are lifted and as U.S. drilling activity sustained its increase.

Futures slid as much as 1.6 percent in New York. The Organization of Petroleum Exporting Countries may boost output to 33 million barrels a day after Iran’s international export restrictions are removed, according to the nation’s OPEC representative. The number of rigs seeking oil in the U.S. rose by two to 672, the most since May, Baker Hughes Inc. data show.

Oil has slumped more than 30 percent from the June closing peak this year amid speculation the global surplus will be prolonged. While U.S. crude stockpiles fell a third week through Aug. 7, supplies remain more than 90 million barrels above the five-year average for this time of year.

“There is no change to the fundamentals,” Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. “The market is continuing to drift lower and it’s doing so without pause. Inventories in the U.S. remain large for this time of the year, the drawdown over the summer driving season has been relatively disappointing.”

West Texas Intermediate for September delivery fell as much as 67 cents to $41.83 a barrel on the New York Mercantile Exchange and was at $42.06 at 2:57 p.m. Singapore time. The contract gained 27 cents to $42.50 on Friday. The volume of all futures traded was about 29 percent above the 100-day average. Prices have decreased 21 percent this year.

U.S. Drilling

Brent for October settlement dropped as much as 69 cents, or 1.4 percent, to $48.50 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $6.05 to WTI for the same month.

Drillers in the U.S., the world’s biggest oil consumer, have added rigs to fields for the fourth straight week, Baker Hughes said on its website. While the number of active machines has climbed to 672, the total count is still down almost 60 percent since December.

The U.S. agreed to allow some crude to flow to Mexico in the latest step toward easing a 40-year ban on most domestic exports.

Producers including Exxon Mobil Corp. and ConocoPhillips have called for an end to U.S. export restrictions after the drilling boom boosted the nation’s output. Up to 100,000 barrels a day of light oil and condensate will be exchanged for heavy Mexican crude, according to Petroleos Mexicanos, the state-owned oil company.

The global oil market is already in surplus by about 3 million barrels a day, with Saudi Arabia and Iraq responsible for OPEC’s oversupply in the past six months, Iran’s state-run Islamic Republic News Agency reported Sunday, citing the nation’s OPEC representative Mehdi Asali.