LONDON/JEDDAH — Oil prices dropped on Tuesday following reports of rise in crude production by oil exporter Saudi Arabia which pumped 10.308 million barrels of oil a day in the month of April, compared to 10.29 million bpd in March, a Gulf industry source told Reuters on Tuesday. "This is an indication of strong demand, especially from Asia, as well as increasing domestic consumption during summer," the source said. Brent crude fell 20 cents to $64.71 a barrel, while West Texas Intermediate (WTI) dropped 8 cents to $59.17 a barrel, Reuters reported. It also highlights the strength of global demand, which has helped lift refinery profit margins to their highest in years. Oil Minister Ali Al-Naimi has said the kingdom's output would likely remain around 10 million bpd, and that he was "very positive" about Asian oil demand outlook. The amount of crude supplied to the market in April was 10.360 million bpd, the source said. Supply to the market, both domestically and for export, may differ from production depending on the movement of oil in and out of storage. April's output eclipsed the previous recent peak of 10.2 million bpd in August 2013, according to records going back to the early 1980s. Last week, a senior Gulf OPEC delegate told Reuters the rise in oil prices has been supported by stronger-than-expected demand growth and a slowdown in crude supply, and is likely to continue into the second half of this year. A warning from the US-based Goldman Sachs that the recent price rise helped in the reduction of oversupply also led to the fall in prices. "While low prices precipitated the market rebalancing, we view the recent rally as premature with crude oil prices expensive relative to current and forecast fundamentals." The investment bank said "while low prices precipitated the market rebalancing, we view the recent rally as premature with crude oil prices expensive relative to current and forecast fundamentals." The bank added that prices need to weaken gradually if any rebalancing of oil prices is to happen, saying that the recent rally in prices is premature. The fall in oil price was also a response to ongoing debt trouble in the eurozone, and a result of a rise in the value of the dollar. On Monday, the International Monetary Fund received around €750m ($836.7m) from Greece, which could not stop concerns over future payments. — SG/Agencies
