Oil prices dip on unexpected growth in U.S. crude stocks

SEOUL (Reuters) – Oil prices dropped on Thursday, weighed down by a surprise rise in U.S. crude inventories and by expectations that OPEC and other producers could increase output at a meeting in June.

Brent crude was down 20 cents at $77.30 per barrel at 0041 GMT, after settling the last session up 2.8 percent.

U.S. West Texas Intermediate crude was down 20 cents at $68.01 a barrel. In the previous session, it settled up $1.48, or 2.2 percent, at $68.21 per barrel.

U.S. crude inventories rose by 1 million barrels in the week to May 25 to 434.9 million barrels, according to data from industry group the American Petroleum Institute, although analysts had expected a decrease of 525,000 barrels. [API/S]

Data from the Energy Information Administration is due at 11 a.m. EDT on Thursday, a day later than usual due to a public holiday on Monday.

A possible production increase by the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC members including Russia has been in focus, especially after Saudi Arabia, de facto leader of the oil cartel, and Russia have discussed boosting output by some 1 million barrels per day.

OPEC and some non-OPEC members have committed to curb their output by about 1.8 million barrels per day until the end of 2018, and they will meet in Vienna on June 22 whether or not their commitment should remain unchanged.

“With the OPEC meeting still another three weeks away, oil prices are likely to remain sensitive to headlines,” ANZ bank said in a note.

A Gulf source familiar with the thinking of Saudi Arabia said OPEC and its allies aim to continue their agreement to cut oil output by the end of this year but are ready to make gradual adjustments to offset any supply shortfall.