Oil fell below $61 a barrel today, ahead of an OPEC meeting later this week expected to keep output unchanged, while growing fears of North Korea firing another short-range missile encouraged some profit-taking.
US oil prices for July delivery fell 70 cents from Friday's close to stand at $60.97 a barrel by 3.47am. London Brent crude fell 16 cents to $60.05.
There was no settlement price as NYMEX was closed for the Memorial Day holiday in the United States.
“Oil markets appear to be anticipating that OPEC will leave oil production targets unchanged at the meeting on May 28th,” said David Moore, a commodities analyst at Commonwealth Bank of Australia.
OPEC is not expected to change production policy this week, the al-Hayat newspaper quoted Saudi Oil Minister Ali al-Naimi as saying on Tuesday, adding that the world stocks were still too high to consider lifting output.
The comments from Naimi, OPEC's most influential minister, echoed those made by several other members such as Algeria and Kuwait and signalled that the cartel would want to see world stocks - now swollen at around 61-62 days worth of global consumption - return to their historic range before considering loosening the taps.
The producer group, which has already pledged to curb output by 4.2 million barrels per day since September, will meet in Vienna on Thursday to review its supply policy.
Rising geopolitical tensions sparked by North Korea's nuclear test yesterday fanned investor worries, prompting investors to take profit after last week's almost 10 per cent gain in prices.
North Korea is ready to fire another short-range missile off its west coast either today or tomorrow, Yonhap news agency quoted a South Korean official as saying.
“Traders in the oil community generally won't give too much weight to the North Korea issue. This is probably a knee-jerk reaction and is giving a profit-taking opportunity after the strong rise in prices last week,” said Gerard Rigby, an analyst at Fuel First Consulting in Sydney.
Reuters