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Oil Prices Falling After Saudis Say They Can Increase Supply

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Oil Prices Falling After Saudis Say They Can Increase Supply
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Brent crude was trading 32 cents lower at $64.79 a barrel at 11:00 GMT, while U.S. light crude was lower by 53 cents at $60.24. The move lower is being attributed to reports that Saudi Arabia is believed to be in talks with Indian buyers to supply additional crude.

Reuters noted that the talks between the two implies Saudi Arabia is prepared to boost its oil production above its 10.3 million barrels record in May. A rise in production could further contribute to the current "glut" in global supply, the publication added.

Reuters also pointed out that if demand for refined products dip due to oversupply, analysts have said that would "spill back" into the crude market and "pull down" prices there as well, as refineries lower their orders and reduce output.

Price Action

Shares of the iPath S&P GSCI Crude Oil Total Return (NYSE: OIL) was trading lower by 1.20 percent an hour before Friday's opening bell. The United States Oil Fund LP (ETF) (NYSE: USO) was also lower by 0.98 percent at the same time.

The U.S. dollar was also trading higher against the euro which weighed on the dollar-denominated oil after the International Monetary Fund pulled out of stalled debt talks with Greece.

Oil linked currencies were also lower Friday morning. The Canadian dollar was down nearly one-fifth of a U.S. cent just before North American stock markets were set to open.

Brent crude was trading 32 cents lower at $64.79 a barrel at 11:00 GMT, while U.S. light crude was lower by 53 cents at $60.24. The move lower is being attributed to reports that Saudi Arabia is believed to be in talks with Indian buyers to supply additional crude.

'Glut' In Global Supply

Reuters noted that the talks between the two implies Saudi Arabia is prepared to boost its oil production above its 10.3 million barrels record in May. A rise in production could further contribute to the current "glut" in global supply, the publication added.

Reuters also pointed out that if demand for refined products dip due to oversupply, analysts have said that would "spill back" into the crude market and "pull down" prices there as well, as refineries lower their orders and reduce output.

Shares of the iPath S&P GSCI Crude Oil Total Return (NYSE: OIL) were trading lower by 1.20 percent an hour before Friday's opening bell. The United States Oil Fund LP (ETF) (NYSE: USO) was also lower by 0.98 percent at the same time.

The U.S. dollar was also trading higher against the euro which weighed on the dollar-denominated oil after the International Monetary Fund pulled out of stalled debt talks with Greece.

Oil linked currencies were also lower Friday morning. The Canadian dollar was down nearly one-fifth of a U.S. cent just before North American stock markets were set to open.

The International Energy Agency commented on Thursday that it expects world oil demand to rise more than expected given an economic recovery and a relatively cold winter in the northern hemisphere.

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