Oil prices dip as Opec mulls higher output

London: Oil prices fell on Monday as US production hit a record high and as Opec members considered boosting supply.

Benchmark Brent crude oil lost $1.26 a barrel, or 1.6 per cent, to hit a low of $75.53 before recovering a little to $75.69, down $1.10, by 1035 GMT.

US light crude was 40 cents lower at 65.41 a barrel. The US contract lost around 3 per cent last week, after a near 5-per-cent decline the week before.

“We are going into summer, the high demand season, and I think we are going to see a fall in US crude oil inventories, but shale oil output is growing,” said Tony Nunan, risk manager at Mitsubishi Corp.

US crude production climbed in March to 10.47 million barrels per day (bpd), a monthly record, data from the Energy Information Administration showed last week.

US drillers added two oil rigs in the week to June 1, bringing the total to 861, the most since March 2015, energy services firm Baker Hughes said on Friday. That was the eighth time drillers have added rigs in the past nine weeks.

Arab oil ministers agreed over the weekend on the need for continued cooperation between members of the Opec and other big producers to balance global supply, Kuwait’s state news agency KUNA reported on Sunday.

Opec ministers from Saudi Arabia, the UAE, Kuwait and Algeria along with their counterpart from non-Opec Oman met unofficially in Kuwait on Saturday.

Opec meets formally on June 22 to set oil policy. It is expected to agree to raise output to cool the market amid worries over Iranian and Venezuelan supply and after Washington raised concerns the oil rally was going too far, Opec sources familiar with the discussions told Reuters last month.

Saudi Arabia, effective Opec leader, and Russia have discussed boosting output to compensate for supply losses from Venezuela and to address concerns about the impact of US sanctions on Iranian output.