Crude oil prices fell more than 5%, the biggest drop in seven months, after a Venezuelan oil official signaled that OPEC could soon boost output and cap this year's rally in prices.
The Organization of Petroleum Exporting Countries should consider increasing output if prices reach $22 in New York, Roberto Mandini, president of Venezuela's state-owned oil company Petroleos de Venezuela, told reporters. Cuts by OPEC and others sent crude oil up two-thirds this year, closing above $20 a barrel last week.
"When Venezuela says that $22 should be the top, it's time to head for the exits," said John Kilduff, senior vice president of energy risk management at Fimat USA Inc. in New York. Because Venezuela is one of the world's biggest oil producers, the comment "will carry great weight," he said.
Crude oil for August delivery fell $1.07, or 5.2%, to $19.37 a barrel in its last day of trading on the New York Mercantile Exchange, the biggest one-day drop since Dec. 17.
Crude oil futures in New York have retreated 6.1% from Friday's 20-month high, as traders speculated whether OPEC and other producers would stick with promises to reduce output by about 7% to erase a glut that sent prices to a 12-year low in December.
OPEC achieved 94% of its promised output reductions of 4.3 million barrels a day as of last month, according to Bloomberg estimates.
Prices already were lower before Mandini's comment amid speculation that a report from the American Petroleum Institute would show U.S. crude oil inventories are abundant, even amid strong demand from refiners making gasoline for the summer driving season.
Some in the industry are questioning statistics from the API and Energy Department showing steady declines in U.S. crude oil inventories. Last week, the API reported that inventories dropped for a fourth straight week, falling 2.59 million barrels to a six-month low of 324.6 million during the week ended July 9.
Analysts surveyed by Bloomberg News said they expected the API would report that U.S. crude oil supplies rose last week. Supplies already were 1.6% higher than the five-year average.
The API report, issued after the end of trading, showed inventories rose a greater-than-expected 5.53 million barrels, or 1.7%, last week to 332.09 million barrels. That included a revision that raised the previous week's figure by 1.93 million barrels. Analysts expected a gain of 400,000 barrels to 1.1 million barrels.
Oil product prices also fell. August gasoline dropped 1.78 cents, or 2.9%, to 60.01 cents a gallon on the Nymex, and August heating oil fell 1.71 cents, or 3.3% to 49.65 cents a gallon.