Oil below $99 ahead of Opec meeting

2011-06-08 08:48

Singapore - Oil prices fell below $99 a barrel Wednesday in Asia amid signs the Organisation of Petroleum Exporting Countries (Opec) may raise its crude production quotas at a meeting in Vienna.

Benchmark oil for July delivery was down 43c to $98.66 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract added 8c to settle at $99.09 on Tuesday.

In London, Brent crude for July delivery was down 63c to $116.15 a barrel on the ICE Futures exchange.

Investors will be closely watching the outcome of a meeting later Wednesday of the Organization of Petroleum Exporting Countries, a cartel that controls about 40% of global crude output.

Opec leaders have been split this week over whether they should raise production. Saudi Arabia, the group's biggest supplier, has supported a price between $70 and $80 while Iran, the second-largest producer in Opec, is against any output hike.

"Suggestions of a quota increase of between 1 million and 1.5 million barrels per day now appear likely," Ritterbusch and Associates said in a report.

Signs of strong US crude demand provided a floor for prices.

The American Petroleum Institute said late Tuesday that crude inventories fell 5.5 million barrels last week, more than the drop of 1.5 million barrels predicted by analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos.

Inventories of gasoline declined 161 000 barrels last week while distillates rose 1.8 million barrels, the API said.