Oil headed for the first weekly decline since March amid speculation that a supply glut will persist as U.S. producers prepare to boost drilling.
Futures fell as much as 1 percent in New York, extending Thursday’s 3.3 percent drop. EOG Resources Inc. said Tuesday it plans to increase drilling as soon as prices stabilize at about $65 a barrel, while other shale-oil companies lifted their production outlook.
Iran plans to expand output in 10 days if economic sanctions are removed, according to Oil Minister Bijan Namdar Zanganeh.
Oil has rebounded 36 percent from a six-year low in March as drillers in the U.S. reduced the number of active rigs to the fewest since September 2010.
While the nation’s crude production slowed last week, stockpiles are more than 100 million barrels above the five-year average for this time of year, Energy Information Administration data showed.
“There’s recognition by the market that we’re approaching territory where the oil price might begin to encourage marginal production,” Ric Spooner, a chief strategist at CMC Markets in Sydney, said.
“Prices would need to be sustained up around those levels to do that, but the bottom line is that might cap gains to some extent.”
West Texas Intermediate for June delivery slid as much as 61 cents to $58.33 a barrel in electronic trading on the New York Mercantile Exchange and was at $58.67 at 2:45 p.m. Singapore time.
The contract lost $1.99 to $58.94 on Thursday. Total volume was about 13 percent below the 100-day average. Prices have decreased 0.8 percent this week.
Brent for June settlement was 14 cents lower at $65.40 a barrel on the London-based ICE Futures Europe exchange. It fell $2.23 to $65.54 on Thursday and is poised for the first weekly decline in more than a month. The European benchmark crude traded at a $6.74 premium to WTI, compared with $7.31 on May 1.
Shale-oil explorer Pioneer Natural Resources Co. has said it’s preparing to deploy more rigs as early as July, while Carrizo Oil & Gas Inc., Devon Energy Corp. and Chesapeake Energy Corp. this week raised their full-year production outlook.
US crude inventories slid to 487 million barrels last week, the EIA reported Wednesday. Supplies remain near the highest level since 1930, based on monthly records from the Energy Department’s statistical arm dating back to 1920.
Oil will probably advance to $80 a barrel by the end of next year as U.S. supply slows, Roknoddin Javadi, Iran’s deputy oil minister, said Thursday at a news conference in Tehran.
Current prices are unsustainable, said Javadi, who is also the managing director of state-run National Iranian Oil Co.
Iran, the fifth-largest producer in the Organization of Petroleum Exporting Countries, pumped 2.78 million barrels a day in April, data compiled by Bloomberg showed.
Output would rise to 3.8 million a day within six months and 4 million in less than a year if sanctions were removed, Oil Minister Zanganeh said Wednesday.
Exports have decreased more than 60 percent because of penalties imposed by the United Nations, the US and the European Union, according to Zanganeh. Talks on its nuclear program are scheduled to resume May 12, with a June 30 deadline for a final agreement.
In China, crude imports climbed to 30.29 million metric tons last month, preliminary data released by the General Administration of Customs in Beijing showed. That’s equivalent to 7.4 million barrels a day, the most on record. The Asian nation is the world’s biggest oil consumer after the US.