Oil fell for a third day on speculation the highest production in decades from the U.S. and OPEC’s largest members will keep global markets oversupplied.
The drop in crude accelerated as the dollar advanced against its major peers after weekend negotiations between Greece and its creditors broke down. A stronger dollar makes raw materials priced in the U.S. currency less attractive as a store of value.
Oil’s recovery from a six-year low has faltered as a rebound of almost 40 percent since March spurs production. While data from Baker Hughes Inc. showed drillers in the U.S. cut the number of active oil rigs for a 27th week, the nation’s output still advanced to a three-decade high of 9.61 million barrels a day. Saudi Arabia, Iraq and the United Arab Emirates are pumping record amounts of crude as OPEC agreed June 5 to maintain its output quota to defend market share.
“The realization that there’s more than enough oil to meet demand is weighing on the market right now,” Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut, said by phone. “The dollar’s strength is adding to the weakness of the market today.”
West Texas Intermediate for July delivery fell 95 cents, or 1.6 percent, to $59.01 a barrel at 9:25 a.m. on the New York Mercantile Exchange. The volume of trading was 36 percent below the 100-day average for the time of day. Prices are up 10 percent this year.
Brent for July settlement, which expires Monday, declined $1.30, or 2 percent, to $62.57 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a $3.60 premium to WTI. The more-active August contract dropped 1.2 percent to $63.87.
The dollar rose after the latest round of bailout talks between Greece and its creditors ended in acrimony after leaders met for just 45 minutes in Brussels on Sunday. The Bloomberg Dollar Spot Index, which tracks the U.S. currency versus 10 of its major peers, increased 0.2 percent.
Drillers in the U.S. seeking oil reduced the number of active rigs by seven to 635 in the week ended June 12, Baker Hughes, an oilfield-services company, said Friday. The nation’s rig count has shrunk 60 percent since December.
OPEC, whose 12 members pump about 40 percent of the world’s oil, has been boosting supply as it seeks to force higher-cost producers to cut output. The group has exceeded its target of 30 million barrels a day for a year, data compiled by Bloomberg show. Saudi Arabia, Iraq and the U.A.E., the three largest producers in the group, pumped at a record in May, the International Energy Agency reported June 11.
Libya’s output has climbed to 500,000 barrels a day, Libya News Agency reported, citing an unidentified official at National Oil Corp.
Hedge funds cut bullish wagers on WTI to the lowest level in eight weeks, according to Commodity Futures Trading Commission data. Net-long positions fell by 3.7 percent in the seven days to June 9, while longs declined to a five-month low.