[MOSCOW] Brent crude traded near US$65 a barrel amid lower volumes due to public holidays across much of Europe and the US.
Futures fell for a second day, dropping as much as one per cent before recouping some losses. Violence flared in OPEC's biggest members Iraq and Saudi Arabia, raising tensions ahead of the producer group's meeting on June 5 in Vienna.
Oil's rebound from a six-year low is faltering as the Organization of Petroleum Exporting Countries maintains output to defend its market share. Crude inventories in the US, the world's biggest consumer, are close to the highest level in 85 years, according to the Energy Information Administration.
"Prices are slipping in a thinly traded market due to holidays in the US and Europe," said Christopher Bellew, senior broker at Jefferies International Ltd in London. "The deteriorating situation in Syria and Iraq has not given prices more upward stimulus, which may be a symptom of how well supplied the market is."
Brent for July settlement was 21 cents lower at US$65.16 a barrel in electronic trading on the ICE Futures Europe exchange at 1:24 pm in London. The contract fell US$1.17, or 1.8 per cent, on Friday to end the week at US$65.37. Total volume was about 80 per cent below the 100-day average. The European benchmark crude traded at a premium of US$5.84 to West Texas Intermediate.
WTI for July delivery was at US$59.37 a barrel on the New York Mercantile Exchange, down 35 cents. The contract declined US$1 to US$59.72 on Friday. Prices have gained 11 per cent this year.
There will be no floor session at the exchange on Monday because of the US Memorial Day holiday, and transactions will be booked Tuesday for settlement purposes.
The world economy needs stable oil prices, Venezuelan President Nicolas Maduro said in a national address broadcast on radio and television Sunday. Opec, which supplies about 40 per cent of the world's crude, is scheduled to discuss its production policy next week.
Opec in November resisted calls to cut output to support prices, maintaining its collective target at 30 million barrels a day. The 12-member group pumped 31.3 million a day in April, exceeding its target for an 11th consecutive month, a Bloomberg survey of companies and analysts showed.
The fall of the Iraqi city of Ramadi, about 70 miles (110 kilometres) west of Baghdad, to Islamic State fighters is one of the militants' biggest successes since they swept across the north of the country a year ago. Prime Minister Haidar Al-Abadi vowed to retake Ramadi "within days," dismissing US claims the Iraqi forces aren't up for the fight.
Iraq Setback Islamic State claimed responsibility for a suicide bomber who killed 21 people in a mosque in Saudi Arabia's oil-rich Eastern Province on Friday.
In Libya, warplanes deployed by the internationally recognized government bombed a tanker carrying fuel from Greece at a port controlled by a rival Islamist administration, the regional coastguard commander said. Conflict has split the nation that holds Africa's biggest oil reserves, reducing its production to about 400,000 barrels a day, according to state- run National Oil Corp.
The number of rigs targeting oil in the US dropped by one to 659, data from Baker Hughes Inc showed. The national rig count has decreased by 58 per cent since Dec 5, the oilfield- service company said on its website. Crude stockpiles were at 482.2 million barrels through May 15, more than 100 million above the five-year average for this time of year, according to the EIA, the Energy Department's statistical arm.
The Chicago Board Options Exchange Crude Oil Volatility Index closed at 31.29 on Friday, advancing for the first week since March. The gauge of hedging costs on the US Oil Fund, the largest exchange-traded fund tracking crude futures, slumped 32 per cent last month.
Hedge funds and other money managers cut bullish bets on Brent crude by 37,339 contracts in the week ended May 19, which was the biggest drop since December, according to data from ICE on Monday.