Oil Slips After Biggest Jump in a Month Amid Supply Increases

Oil retreated in New York after its biggest jump in more than a month as some of the supply risks facing the market abated.

West Texas Intermediate futures slipped 0.5 percent, after climbing 2.1 percent to surpass $70 a barrel on Monday. Russia’s oil production reached 11.22 million barrels a day this month as the caps imposed in a pact with OPEC eased, Interfax reported, while data from Kazakhstan’s government showed that its output recovered. Meanwhile, President Trump said he’s open to talks with Iran just as U.S. sanctions on the country’s oil trade take hold.

Crude is poised for the biggest monthly loss in a year as simmering trade tensions between the U.S. and China push prices lower at a time when American shale output continues to surge. Still, falling production in Venezuela, a civil war in Libya and impending American sanctions on Iranian oil have raised fears over a global supply crunch. Barclays Plc has warned of “ significant upside risk” for prices as sanctions begin to bite Iranian exports.

“Prices shed some of yesterday’s gains overnight,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. “One factor in this is likely to have been President Trump, who unexpectedly signaled his willingness to meet unconditionally with Iranian President Rouhani.”

WTI crude for September delivery traded at $69.76 a barrel on the New York Mercantile Exchange, down 37 cents, at 10:37 a.m. London time. The contract is on course for a 6 percent decline this month, which would be the biggest such drop since March 2017. Total volume traded was about 39 percent below the 100-day average.

Brent for September settlement, which expires Tuesday, fell 19 cents to $74.78 a barrel on the London-based ICE Futures Europe exchange. The contract is down almost 6 percent this month. The more actively traded October contract lost 25 cents to $75.30. Global benchmark Brent traded at a $4.97 premium to September WTI.

Trump on Iran

Trump said Monday he’d meet his Iranian counterpart without preconditions following a war of words earlier this month. The White House appeared to quickly walk back his comments and signaled the U.S. will end sanctions on Iran only if the Islamic Republic’s behavior changes. Secretary of State Michael Pompeo laid out terms for a meeting between the U.S. and Iranian leaders.

Other supply threats continue to support the market. A strike hit production at Total SA’s three oil fields in the North Sea, and concerns remain over Saudi Arabia’s suspension of crude shipments through a key sea-transit route following attacks by Yemeni rebels.

Saudi tankers altered course after the kingdom last week took the extraordinary measure of temporarily halting oil shipments via the Bab el-Mandeb Strait at the southern tip of the Red Sea.

Other oil-market news:

Kazakhstan’s output rose to 1.91 million barrels a day in July from 1.897 million a day in June, according to Bloomberg calculations based on data from the Energy Ministry and Information-Analytical Centre of Oil and Gas. U.S. inventories are forecast to have fallen by 3 million barrels last week, according to a Bloomberg survey of analysts before government data due Wednesday. Stockpiles at the Cushing storage hub in Oklahoma decreased 500,000 barrels in the week ended July 27, according to a forecast compiled by Bloomberg. Barclays maintained its estimate of disruption to Iran’s crude exports at about 700,000 barrels a day.