Oil prices fell below US$70 a barrel in New York for the first time in more than two weeks as Saudi Arabia said it expects OPEC and its partners to boost supplies later this year, easing restraints intact since early 2017.

U.S. futures fell by nearly 4 per cent, heading toward the first weekly drop this month. The price decline on Friday also comes ahead of the U.S. Memorial Day holiday weekend, when high gasoline prices will be at issue.

Supply caps may be scaled back later this year, though no decision has been made, Saudi Arabian Energy Minister Khalid Al-Falih said in St. Petersburg in comments echoed by his Russia counterpart, Alexander Novak. The two producers plan to meet at least twice more before an OPEC gathering in Vienna next month, the Saudi minister added.

“We’re starting to see growing concerns that producers could cut back on their output cuts,” said Gene McGillian, market research manager at Tradition Energy, in a telephone interview. “Taking that into consideration along with record U.S. production levels, it’s triggered a nice amount of profit taking."

Oil has traded near a 3 1/2-year high on concern about supply disruptions from Venezuela and Iran. The rally has sparked worries that demand may falter, and the Organization of Petroleum Exporting Countries and its allies appear to be reacting to that idea with the first offer to boost output since January 2017.

West Texas Intermediate for July delivery traded down by US$2.47 at US$68.24 a barrel on the New York Mercantile Exchange at 11:20 a.m. local time. The contract lost 1.6 per cent to US$70.71 on Thursday. Total volume traded was about 41 per cent above the 100-day average.

Brent futures for July settlement traded at US$76.60 a barrel on the London-based ICE Futures Europe exchange, down US$2.19, and headed for a weekly drop for the first time in seven weeks. The global benchmark crude traded US$8.36 above WTI for the same month, after closing at the biggest premium since April 2015 on Thursday.

OPEC+ Talks

Futures for September delivery fell 1.6 per cent to 477.4 yuan a barrel in afternoon trading on the Shanghai International Energy Exchange. Prices are down 1.9 per cent this week. The contract rose 0.1 per cent to 485 yuan on Thursday.

Other oil-market news:

The world’s top oil trader, Vitol Group, said it will be near impossible to avoid U.S. sanctions on Iran, suggesting U.S. President Donald Trump’s attack on OPEC’s third-largest producer may have a bigger impact on the global crude market than many anticipate. The rise in oil prices to US$80 a barrel is starting to cause concern across boardrooms, with some big industrial consumers, including airlines and shipping companies, starting to buy more insurance against rising energy prices. Andurand’s oil hedge fund to turn investors away from June The world’s largest oil exporter just made a policy swerve, moving from advocating higher prices to trying to stop the rally Gasoline futures in New York were set for the first weekly decline since early May, and traded at US$2.1917 a gallon.