Crude oil fell after Reuters reported the Organization of Petroleum Exporting Countries was concerned about high oil prices and their impact on the world economy.
The group may pump more oil to increase supplies, though it's unclear whether extra production will be needed this year, OPEC President Mohamed al-Hamli said, according to Reuters. OPEC, which produces 40 percent of the world's oil, considers $60 to $65 a barrel a ``reasonable'' price for crude, KPC World, the monthly bulletin of the Kuwait Petroleum Corp. reported.
``The prospect that OPEC will consider increasing output in the third or fourth quarter is sending us lower today,'' said Eric Wittenauer, an energy analyst at A.G. Edwards & Sons Inc. in St. Louis. ``Expectations that crude-oil inventories will fall during the remainder of the summer have pushed prices higher. OPEC may now make more crude oil available in the months ahead.''
Crude oil for September delivery fell $1.04, or 1.4 percent, to $74.75 a barrel at 9:31 a.m. on the New York Mercantile Exchange. Futures reached $76.13 on July 20, the highest intraday price for a front-month contract since Aug. 10. Prices are up 23 percent this year.
Brent crude oil for September settlement declined 24 cents, or 0.3 percent, to $77.40 barrel on the London-based ICE Futures exchange.
There is little evidence so far that high energy costs have affected economic growth, al-Hamli, who is also the United Arab Emirates' oil minister, told Reuters in an interview yesterday. Adjusted for inflation and a weaker dollar, crude is no higher than it was three decades ago, al-Hamli said.
The dollar traded near a record low against the euro today, making dollar-priced oil imports cheaper for the 13 nations that share the euro. In U.S. dollars, West Texas Intermediate, the New York-traded crude benchmark, is up 0.9 percent in the past 12 months. Oil has dropped 7.4 percent in euros, 9 percent in British pounds and has risen 5.3 percent in yen.
In the past, members of the Organization of Petroleum Exporting Countries have said a falling dollar justified higher prices because oil-producing countries sell oil in dollars and often buy goods in euros.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net .
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