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Oil prices lower on eve of OPEC meet, US energy report

LONDON - World crude prices fell on Wednesday, the eve of the latest OPEC output decision and the weekly US energy report, after spiking above 72 dollars the previous day on Iran concerns.

New York’s main contract, light sweet crude for delivery in July, fell 68 cents to 71.35 dollars per barrel in electronic deals before official opening of the US market.

In London, Brent North Sea crude for July delivery sank by 51 cents to 70.54 dollars per barrel in electronic trading.

Prices were dampened by expectations that the Organization of Petroleum Exporting Countries (OPEC) will stick with the oil cartel’s current production quotas when they meet on Thursday.

“It looks like (OPEC) are not going to reduce production levels (so) the market has sold off,” said Tony Nunan, a Tokyo-based energy risk manager for Mitsubishi Corp.

OPEC ministers meet in Caracas to decide production levels but delegates have indicated the 11-member oil cartel will keep its official production quota intact.

The oil cartel has an official production quota of 28 million barrels of day, its highest level in 25 years.

The US Department of Energy also unveils its weekly market update on crude inventories on Thursday, one day later than normal owing to the Memorial Day public holiday on Monday.

Dealers expect that a build-up in US gasoline or petrol supplies, amid the start of the American driving season which sees US holidaymakers take to the roads, will provide relief from supply concerns over the Iranian nuclear energy dispute.

Crude futures had jumped on global markets Tuesday as traders tracked the latest developments over Iran, while absorbing new data pointing to buoyant Chinese energy demand.