Oil prices drop following OPEC meeting

Oil prices fell on Tuesday following news that OPEC increased its production pace, while keeping its forecast for global demand. The Organization of Petroleum Exporting Countries increased its output in May by 106 000 barrels to a six-month record level of 30.57 million barrels per day, which is still in line with the groups appointed target on their meeting in Vienna May 31.

On the New York Mercantile Exchange, WTI crude for July delivery fell 1.78% to a days low and traded at $94.07 a barrel at 13:13 GMT. Prices ranged between the recently hit days low at $94.07 and a high at $95.90 a barrel.

Brent oil for August delivery fell below $102 to trade at $101.95 a barrel at 13:15 GMT, down 1.89% for the day. The European benchmark varied between days low at $101.92 and high at $103.85 per barrel.

According to the organization, oil demand will grow quicker through the rest of 2013. OPECs report stated: “The second half of the year is expected to see higher demand. In terms of demand growth, the expected global economic recovery in the second half of this year could also add more barrels to seasonally higher global consumption.” Global oil demand is projected to increase by 0.9%, or 780 000 barrels a day, to 89.7 million per day, which matches the previous report.

OPECs Vienna secretariat said: “Existing fundamentals portray a market with ample supply. Looking at the second half of the year, the world economy is expected to experience slightly higher growth. However, risks are skewed to the downside.”

Saudi Arabia, OPECs biggest oil producer, accounts for most of the groups output increase, compensating for reduced production from Libya, Nigeria and Iran. Irans output fell by 37 700 barrels per day to 2.6 million and Libya experienced a 27 300 barrels decline to 1.4 million. Saudi Arabia increased its production pace by 143 400 to 9.4 million per day.

Meanwhile, oil traders are looking ahead into APIs report, scheduled for today and the Energy Information Administrations more reliable report, due on Wednesday at 14:30 GMT. According to a Reuters pole of five analysts, U.S. crude oil stockpiles are expected to have risen last week on higher imports. A separate survey, conducted by Bloomberg News, says crude reserves probably have gained 550 000 barrels last week. Gasoline stockpiles are projected to have surged also by 500 000 barrels and distillate inventories might have added 900 000 barrels.