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Oil falls on Greek crisis worries, Saudi output signal
[NEW YORK] Oil prices fell on Friday on Greek crisis jitters and Saudi Arabia's suggestion it could boost production in an already oversupplied global market.
US benchmark West Texas Intermediate for July delivery shed 84 cents to finish at US$59.61 a barrel on the New York Mercantile Exchange.
Brent North Sea crude for August slumped to US$63.02 a barrel in London, down US$1.24 from Thursday's settlement.
"The petroleum markets are on the defensive from what looks like a bit of further risk-off trade flow, amid uncertainty over the resolution of the Greek debt crisis and worry over ongoing physical oversupply," said Tim Evans, energy futures specialist at Citi Futures.
The growing uncertainty, with European leaders calling an emergency eurozone summit on Monday, weighed on the euro earlier in the day but the shared currency later pared its losses against the dollar. A stronger dollar makes oil more expensive for buyers using other currencies.
Mr Evans pointed to pressure on the market from Opec kingpin Saudi Arabia.
"Saudi Arabian oil minister Ali al-Naimi called fresh attention to the possibility of a persistent surplus on Thursday when he expressed a willingness to use the kingdom's 1.5-2.0 million barrels per day of spare capacity as soon as demand increased to a level that would absorb the additional barrels," the Citi Futures expert said.
"We see the Saudi stance as bearish pressure on those betting on reduced US drilling to rebalance the market quickly." Baker Hughes reported on Friday another fall in the US rig count, helping to ease a bit concerns that robust US production is aggravating the global supply glut.
The rig count fell by four to 631, 59 per cent lower than a year ago as producers scale back production in the face of sharp decline in crude prices.
"Once the rig count came out, the market seemed to climb back from previous lows,"said Phil Flynn of Price Futures Group.