Oil falls on Opec hike possibility

Oil fell on Monday in choppy trading on raised expectations that Opec will raise production targets this week and on continuing concerns about high prices curbing oil demand. Indications that high prices are hurting demand for oil in the consuming West, reinforced by Friday's US jobs report that was the worst since September, have alarmed a group of Opec's core members led by Saudi Arabia enough that they are expected to push for a rise in output at the producer group's Wednesday meeting in Vienna.
But Opec delegates gathering in Vienna said a deal to do more than close the gap between the official output target and actual production could prove difficult. Opposition to higher Opec output targets is expected from Iran and Venezuela. US stocks extended losses in afternoon trading, keeping a five-week decline going on Wall Street and pushing the S&P 500 to a more than two-month low on signs of a slowing economy.
Brent crude for July delivery fell $1.36 to settle at $114.48 a barrel, weakest close in nearly two weeks, having retreated from a $116.14 earlier peak. US July crude fell $1.21 to settle at $99.01 a barrel, lowest close in two weeks, having seesawed near front-month crude's 100-day moving average of $99.67 and the 20-day MA of $99.90, before ending lower.
"Crude oil futures have been choppy, moving in the recent range, cautious ahead of this week's Opec meeting," said Andrew Lebow, broker at MF Global in New York. Oil prices leading up to the Opec meeting have been fairly rangebound, with Brent crude trading between $114 to $117 a barrel over most of the past two weeks. Total crude trading volumes lagged for both US and Brent, on pace to end below 30- and 250-day averages. The dollar recovered against the euro and the dollar index also turned slightly higher, after early weakness had supported dollar-denominated oil prices.
The euro fell back after a German official suggested a second Greek bailout was not yet certain. "Today's lower (oil prices) largely related to the usual bearish combo of stronger dollar and a soft stock market," Jim Ritterbusch, president at Ritterbusch & Associates in Galena, Illinois, said in a note.
"Some positioning ahead of the upcoming Opec meeting also likely prompted some selling as some key oil ministers appear to be sending out overtures of an increase in production quotas," said Ritterbusch. TransCanada Corp's restart of its 591,000 barrel-per-day (bpd) Keystone crude oil pipeline on Sunday, provided additional pressure on oil prices.
A 50-percent possibility of a tropical cyclone developing over the next 48 hours, reported by the US National Hurricane Center, limited the downside for oil prices because of the potential of storm-related disruptions to US Gulf of Mexico and Gulf Coast oil production. Turmoil in the Middle East and Africa, most notably in Yemen and Syria, also helped limit crude price losses.
The United States called on Yemen to move towards democracy while President Ali Abdullah Saleh recovers from shrapnel wounds in Saudi Arabia. Yemen's acting leader insisted Saleh would return in days, even as thousands celebrated what they hope will be a new era without him.
Israel accused Syria of orchestrating lethal confrontations on the once-quiet cease-fire line between the two countries as a distraction from Damascus's bloody crackdown on an 11-week-old revolt. The Nigerian army said it was investigating a purported threat by the Niger Delta's main militant group to attack oil industry facilities.