Oil prices fell on Thursday as a large crude glut overshadowed strong global fuel demand ahead of a meeting on Friday in which OPEC looks to be unlikely to change its production quota. The Organization of the Petroleum Exporting Countries (OPEC) is expected to continue to produce about 2 million barrels per day (bpd) above demand, adding to a glut that has left millions of barrels stored on tankers without a buyer. Front-month Brent futures LCOc1 were down 30 cents at $63.50 per barrel by 0717 GMT. U.S. crude futures CLc1 dropped 40 cents to $59.24. Energy advisory Wood Mackenzie said on Thursday it was unlikely OPEC would agree to cut output at its June 5 meeting and that it expected the group's crude output to remain just above its 30 million bpd production ceiling through 2016. The company said it forecast Brent to average $60 a barrel in 2015 and $70 in 2016. IHS Energy also said it expected no reversal of the producer group's policy of keeping production high in defense of market share instead of cutting output to support prices. "Although surprises from OPEC can never be ruled out, prospects for a policy reversal at this time range from slim to nonexistent. Saudi Arabia and its Gulf allies, which last November instigated the policy of defending market share instead of prices, appear resolved to persist with it," said Bhushan Bahree, senior director at IHS Energy. STRONG FUEL DEMAND Strong global fuel demand has helped to support the market against the crude glut. In China, almost 2 million new cars are sold every month despite its economic slowdown, meaning Asian refiners are consuming a lot of crude as they benefit from near-record gasoline margins. Demand is also strong in sluggish Europe. Goldman Sachs said that Europe's high diesel consumption was a risk to the bank's bearish Brent outlook of $58 per barrel for 2015 and $62 for next year. European diesel demand grew close to a 30 year high of 7.2 percent, or 420,000 barrels per day (bpd), in the first quarter of this year compared with the same period of 2014, bolstering Brent prices, Goldman said. In North America, the peak-demand summer driving season is underway and the U.S. Energy Information Administration (EIA) reported a 1.95 million barrel fall in crude inventories for last week. Source: Reuters
