Oil dips in Asia amid Saudi Arabia output boost reports

Singapore, Aug 18 (AFP) Oil prices eased slightly in Asiatoday amid reports OPEC kingpin Saudi Arabia would furtherraise output in August. Prices hit five-week highs this week, supported by hopesthat a Russian-Saudi cooperation may reach a pact to freezeoutput, easing the stubborn supply glut dogging the marketsince late last year. OPEC members and their non-OPEC rivals are to meetinformally in Algeria next month, and both Saudi and Russiahave indicated they could discuss measures to stabiliseprices. The market was boosted further yesterday after the weeklyUS inventories report showed significant declines incommercial crude stockpiles, indicating strong demand in theworld’s top oil consumer. US crude stockpiles fell by 2.5 million barrels in theweek to August 12, and gasoline stocks declined 2.7 millionbarrels, official data showed. Analysts however, said gains were being eroded by mediareports that Saudi Arabia, OPEC’s top producer, is ramping upproduction to fresh record levels in August. Saudi output was at a record 10.67 million barrels perday in July. "The upside is capped by Saudi’s signals of pumping moreoil in August, which could give the Kingdom more leverageduring talks in Algeria next month," said EY Services oil andgas head Sanjeev Gupta. "The oil market will continue to seesaw amid scepticismover the coordinated efforts to stabilise output," he told AFPby email. At about 1030 IST, US benchmark West Texas Intermediatefor September delivery was down two cents to USD 46.77 whileNorth Sea Brent was down 16 cents to USD 49.69. Both contractsclosed higher yesterday. Stephen Innes, senior trader at OANDA, said prices are onthe slide "as optimism faded for a freeze productionagreement… after Iran communicated little interest in thearrangement". A Saudi-led attempt to freeze output at January 2016levels failed in April after rival oil producer Iran refusedto be part of the deal, saying it needed to raise productiondented by years of Western economic sanctions, which werelifted in January. "What needs closer monitoring are the industry-sourcedreports that Saudi Arabia could boost crude oil output inAugust to record levels," Innes said. IG Markets’ Melbourne-based analyst Angus Nicholson saidthere were "concerns that Saudi Arabia may continue producingoil at their summer output levels rather than following theirusual seasonal slowing of production". (AFP)SAI