Oil retreated from the highest level in almost five months amid rising US crude stockpiles and speculation producers will be unable to agree on an output freeze.
Futures dropped as much as 2.6% in New York as crude supplies rose to 538.6 million barrels last week, the most since 1930, the Energy Information Administration reported yesterday.
Co-operation between producers is still possible, said Saudi oil ministry adviser Ibrahim Al-Muhanna.
“The market is catching its breath after a strong rally,” said Gene McGillian, an analyst and broker at Tradition Energy in Connecticut.
“Production dropped to an 18-month low last week, which is pretty significant, but it comes while we have a huge oil oversupply in storage,” said Mr McGillian.
Talks to freeze supply between some of the world’s largest producers in Doha on Sunday failed after Saudi Arabia said it wouldn’t restrain output without commitments from all Opec members including Iran, which has ruled out a cap for now. Crude’s slump has sent the number of active oil rigs in the US to the lowest since November 2009.
West Texas Intermediate, a key benchmark price in the US for June delivery, fell 1.3% to $43.60 a barrel.
The European benchmark, Brent crude for June settlement, slipped 1.4% to $45.18 a barrel on the London-based ICE Europe Futures exchange.
The drop in prices accelerated as US equities slipped and the dollar rebounded. The Standard & Poor’s 500 Index edged lower.
Kuwait’s oil production is almost back to capacity one day after a strike by workers ended. Opec’s fourth-largest producer boosted output to 2.9 million barrels a day, said acting oil minister Anas Al-Saleh in a letter posted on state-run Kuwait Petroleum’s Twitter account.
Libya will unite the two rival factions of its state oil producer in the next few weeks as the country seeks to triple production to 1 million barrels a day, the National Oil Company chairman Mustafa Sanalla said at a conference in Paris. Output could double within weeks of a political pact, he said.