Oil prices drop on Greece, US output worries

[LONDON] Oil prices slid on Monday amid bearish news on US industrial output and a breakdown in Greece's debt talks.

Worries that US oil output is not declining and Saudi Arabia could further ratchet open its oil pumps also are keeping a ceiling on prices, analysts said.

US benchmark West Texas Intermediate for July delivery dropped 44 cents to US$59.52 a barrel compared with Friday's close.

Brent North Sea crude for July shed US$1.28 to stand at US$62.61 a barrel in London trade.

The US reported industrial output fell another 0.2 per cent in May after an 0.5 per cent drop in April, not unexpected but still casting a cloud on the strength of the economy.

"May's reading was well below expectations, and offers little relief after the weak first quarter," said Amanda Augustine of BBVA.

Investors were focused as well on the turmoil from the breakdown in Greece's talks with creditors, though the euro picked up strength during the day, providing some support to crude prices.

"It's a continuation of the selloff we saw at the end of last week on oversupply concerns," said Matt Smith of Clipper Data.

"We're moving to the low end of the range now, we continue to be volatile and yet range-bound." Investors are also focusing on Iran ahead of a June 30 deadline for the Islamic republic and world powers to come to an agreement on curbing Tehran's nuclear program.

If a deal is reached and implemented, the powers have agreed to gradually scale back sanctions imposed since 2012, including on its petroleum industry.

Iran has the world's fourth-largest oil reserves but its exports have fallen from more than 2.2 million barrels per day in 2011 to about 1.3 million because of the sanctions.

AFP