OIL PRICE: BRENT NEAR $116, WTI ABOVE 112
REUTERS - June 2 - Oil prices fell on Thursday as investors cashed in on a recent rally ahead of a key producers meeting later in the day, with some speculation that Saudi Arabia may boost oil production in response to urging by the United States.
Brent crude was down $2.07, or 1.8%, at $114.22 a barrel at 0649 GMT, having risen 0.6% the previous day.
U.S. West Texas Intermediate (WTI) crude dropped $2.21, or 1.9%, to $113.05 a barrel, after a 0.5% rise on Wednesday.
The benchmarks have marched higher for several weeks as Russian exports have been squeezed by EU and U.S. sanctions against Moscow over its invasion of Ukraine, actions that Russia calls a "special operation".
While China's gradual emergence from strict COVID-19 lockdowns has helped support prices, speculation that Saudi Arabia may step up production weighed on the market, said Tsuyoshi Ueno, senior economist at NLI Research Institute.
"Investors unwound long positions to wait and see whether Saudi Arabia would raise production more quickly to respond to calls from the United States for it to do so, and whether the increase would affect the global supply-demand balance," he said.
Saudi Arabia is prepared to raise its oil production if Russia's output falls substantially because of the Western sanctions imposed on it, the Financial Times reported on Wednesday, citing sources.
Production increases scheduled for September would be brought forward to July and August, the paper said.
Still, others expect OPEC+ - a grouping of the Organization of the Petroleum Exporting Countries (OPEC) and associated allied producers, including Russia - will keep its production policy unchanged.
Five OPEC+ sources said on Wednesday that OPEC was set to stick to its modest monthly increases in oil output, despite seeing tighter global markets.
"We expect no surprise from OPEC+ as the group is unlikely to change their policy when Russian Foreign Minister Sergei Lavrov is visiting Saudi Arabia," said Kazuhiko Saito, chief analyst at Fujitomi Securities Co Ltd.
Saito predicted the market, which was dented by profit-taking, would regain ground after the meeting, because of lingering tightness in global supply and strong demand for fuel in the United States and Europe.
The Wall Street Journal reported on Tuesday that some OPEC members were considering suspending Russia from the agreed production plan, to allow other producers to pump significantly more crude, as sought by the United States and European nations.
But two OPEC+ sources told Reuters a technical meeting on Wednesday had not discussed the idea. Six other OPEC+ delegates said the idea was not being discussed by the group.
An OPEC+ technical committee trimmed its forecast for the 2022 oil market surplus by about 500,000 bpd to 1.4 million bpd, two OPEC+ sources said.