Oil holds near US$60 as Saudis back market share before Opec meets

[MELBOURNE] Oil traded near US$60 a barrel as Saudi Arabia said its efforts to focus on market share are working before Opec meets this week to decide on production policy.

Futures were little changed in New York. Demand is picking up and supply is slowing, Saudi Arabia's Oil Minister Ali al- Naimi said on Monday as he arrived in Vienna for the June 5 meeting. US crude inventories probably fell through May 29, according to a Bloomberg survey before an Energy Information Administration report Wednesday.

Oil's recovery from a six-year low is stalling amid speculation that a global glut will persist as rising prices spur a recovery in US output. The Organization of Petroleum Exporting Countries will maintain a collective quota of 30 million barrels a day, according to all but one of 34 traders and analysts surveyed by Bloomberg.

"I doubt that we'll see any change to OPEC policy," David Lennox, a resource analyst at Fat Prophets in Sydney, said by phone. "The market is going to hold until the results of that meeting is announced and then we'll see where we go from there. We've still got high stockpiles in the US and that's going to keep a lid on any price rally."

West Texas Intermediate for July delivery was at US$60.17 a barrel in electronic trading on the New York Mercantile Exchange, down 3 cents at 10.37 am Sydney time. The contract slid 10 cents to US$60.20 on Monday. The volume of all futures traded was about 73 per cent below the 100-day average. Prices have increased 13 percent this year.

Brent for July settlement decreased 11 cents, or 0.2 per cent, to US$64.77 a barrel on the London-based ICE Futures Europe exchange. It fell 68 cents to US$64.88 on Monday. The European benchmark crude was at a premium of US$4.62 to WTI.

BLOOMBERG