Oil prices fall on dip in China demand, surging United States output

Crude Oil

WTI settles at $64.73/bbl, down 79 cents, or 1.21%, on the day. The spread to Brent crude oil has been even more significant rising to $11 per barrel.

"This is occurring because of the rapid increase in production from US shale coupled with the tightening of supplies elsewhere through the actions of OPEC and Russian Federation", said William O'Loughlin, investment analyst at Australia's Rivkin Securities.

Brent pared losses late in the session, settling down 2 cents at $75.26 a barrel.

India's oil minister said his Saudi counterpart told him the kingdom was revisiting its policy of cutting production, which has supported prices.

"International prices, which hit a high of $80 a barrel in May, are now more likely to head back to $50 a barrel rather than continue surging toward the feared $100 level", said Forbes.

Opec and Russian Federation meet on 22 June to discuss production policy. In 2015, Tehran refused to sign up to OPEC policies, saying it needed to hike output due to the easing of sanctions after a nuclear accord with world powers.

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"It´s all about supply, whether it´s OPEC raising output or US increasing production, all roads lead to higher global oil supplies, which is leaving oil traders shaking in their boots", said Stephen Innes, head of trading for Asia-Pacific at futures brokerage OANDA in Singapore.

Oil prices fell on Friday as concerns about surging US output and falling demand in China weighed on the contract and JP Morgan cut its price forecast. Once again, the nemesis of an oil bull run is higher out in the USA and some non-Opec producers like Mexico, Columbia and Azerbaijan.

Bloomberg reported on Monday that USA officials asked Saudi Arabia and other supply-cutting countries to raise output by about 1 million barrels per day, dampening prices.

USA sanctions on Iran are also threatening to reduce oil exports from the OPEC producer. The contract added 77 cents to US$65.52 yesterday. "We always have conversations with the U.S. about the stability of the oil market".

U.S. President Donald Trump said in April oil prices were artificially high because of OPEC.

The Iranian official also criticized a reported request that the United States made of Saudi Arabia to help stabilize oil prices in case the sanctions against Iran drives oil prices up.

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