Oil Prices sink below $40

World oil prices have dropped. The price of Western Texas Intermediate (WTI) crude slipped below $40 a barrel for the first time in seventeen days.

WTI spot price slid $1.22 to settle at $39.42 a barrel on New York Mercantile Exchange on Thursday, local time. WTI fell below $40 for the first time since $38.92 on May 10.

London Brent crude shed $1.27 to close at $36.85, and Dubai crude fell $0.63 to close at $34.66 a barrel.

The price of WTI and Brent crude oil for July delivery sank $1.26 and $0.83 respectively on the futures market.

Oil prices sank on reports that the Organization of Petroleum Exporting Countries (OPEC) was likely to approve an output increase at a meeting in Beirut Lebanon on June 3.

“Producers are considering an increase in output by 2-2.3 million barrels a day to put pressure on oil prices,” said OPEC President Purnomo Yusgiantoro on Thursday.

“OPEC is considering a temporary lift in its quota restriction,” said the Wall Street Journal. “This, if agreed upon, will give a psychological impact to reducing oil prices.”

“You can’t completely rule out a possible rally before the final announcement by OPEC, even though the oil prices are falling on signs of extra oil supplies from OPEC,” said Koo, Cha-kwon of the global oil research team at the Korea National Oil Corporation.

Ki-Jeong Ko Kwon-Heui Hong koh@donga.com konihong@donga.com