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Asia lags Wall Street's record run, wary of Fed plans

Asian shares turned mixed on Wednesday while the dollar was left adrift as investors everywhere awaited clarity on the Federal Reserve's future path for U.S. policy after a likely rate rise later in the day.

Futures for European bourses likewise pointed to marginal early gains with the Eurostoxx 50 (STXEc1) up 0.1 percent.

Chinese data showed retail sales and industrial output beat forecasts, but a miss in urban investment reinforced views the world's second-largest economy will start to lose momentum as lending costs rise and the property market cools.

The reaction was tepid, with Shanghai stocks easing 0.7 percent (SSEC). Investors dumped stocks partly-owned by Anbang Insurance Group after the company said its chairman was temporarily unable to fulfil his duties.

Moves elsewhere were cautious with MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) up 0.1 percent and Japan's Nikkei (N225) down 0.08 percent.

Wall Street had been in a more confident mood overnight, with major indexes at closing at record peaks. The Dow (DJI) rose 0.44 percent, while the S&P 500 (SPX) gained 0.45 percent and the Nasdaq (IXIC) 0.73 percent. (N)

The S&P 500 technology sector (SPLRCT) rebounded 0.9 percent, following its biggest two-day decline in nearly a year. Big tech names, including Microsoft (O:MSFT) and Facebook (O:FB), led the index higher.

The U.S. central bank is scheduled to release its decision at 1800 GMT on Wednesday with a news conference to follow from Chair Janet Yellen.

Investors fully expect a rate rise largely because Fed officials have told them to, so attention will rather be on the outlook for policy and particularly when the central bank might begin to wind down its massive portfolio of U.S. debt.

"The main focus will be on the Fed's balance sheet policy," said Michelle Girard, chief U.S. economist at RBS (LON:RBS).

"While we expect the formal announcement of a change in its balance sheet policy to be made in September, we do not rule out the possibility that strong guidance regarding the time frame for tapering is delivered sooner."

BEWARE HAWKS

While the Fed still has another hike pencilled in for this year, a recent run of soft inflation data has left fund futures <0#FF:> implying only a 40 percent chance of a move by December.

The market's five-year outlook for inflation has been falling steadily and currently stands at a seven-month trough of 2.18 percent .

It had spiked as high as 2.52 percent last November in the wake of President Donald Trump's surprise election victory.

This leaves the market vulnerable to any hawkish spin from the Fed, which would likely slug Treasury prices while lifting the embattled U.S. dollar.

The currency could do with the help having taken a fresh knock on Tuesday when the head of Canada's central bank put his own hawkish spin on the outlook for rates there.

The U.S. dollar fell as far as C$1.3209 , its lowest since Feb. 28, having shed two cents in as many days.

It also lost ground to sterling after UK inflation data surprised on the high side and amid reports Britain's ruling Conservative Party was likely to sign a deal on Wednesday to form a minority government.

Against a basket of currencies, the dollar barely budged at 96.978 (DXY). It was little changed on the Japanese yen at 110.06 and the euro at $1.1213 .

In commodity markets, oil slipped after industry data showed a surprise rise in crude stocks and OPEC reported an increase in its production despite its pledge to cut back. [O/R]

Benchmark Brent crude (COc1) retreated 35 cents to $48.37 a barrel while U.S. light crude (CLc1) shed 42 cents to $46.04.

Oil prices fall on OPEC output increase, rising U.S. crude stocks

Oil prices fell on Wednesday after data showed a build in U.S. crude stocks and OPEC reported a rise in its production despite its pledge to cut back on output.

Brent crude futures (LCOc1) were at $48.41 per barrel at 0652 GMT, down 31 cents, or 0.6 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures (CLc1) were at $46.10 per barrel, down 36 cents, or 0.8 percent.

Crude prices have fallen by more than 10 percent since late May, pulled down by an supply glut that persists despite a move led by the Organization of the Petroleum Exporting Countries (OPEC) to cut production by almost 1.8 million barrels per day (bpd) until the end of the first quarter of 2018.

OPEC's own compliance with the cuts has been questioned, and the producer group said in a report this week that its output rose by 336,000 bpd in May to 32.14 million bpd.

ANZ bank said in a note to clients that prices were "under pressure earlier in the day after a report from OPEC showed that its production had increased."

Adding to the supply surplus is rising U.S. production from shale drillers that has pushed U.S. output up by 10 percent over the last year to 9.3 million bpd, not far below levels by top exporter Saudi Arabia.

"The outlook for oil hinges on the effectiveness of the OPEC cuts relative to the supply increases from U.S. shale," said William O'Loughlin, analyst at Australia's Rivkin Securities.

Data from the American Petroleum Institute showed on Tuesday that U.S. crude stocks rose by 2.8 million barrels in the week to June 9 to 511.4 million, compared with expectations for a decrease of 2.7 million barrels. [API/S]

With supplies plentiful, strong demand is needed to support the market, but there are signs of a slowdown.

Global energy demand grew by 1 percent in 2016, a rate similar to the previous two years but well below the 10-year average of 1.8 percent, BP (L:BP) said in its benchmark Statistical Review of World Energy on Tuesday.

More specifically for oil, there are signs of a slowdown in China, long the key component of fuel demand growth, as its economy slows. The nation's refiners have produced too much fuel for it to consume, forcing a drop-off in activity.

"Chinese demand is slow ... so we have a build-up of crude in Asia where demand seems to have slowed for now," said Oystein Berentsen, managing director for oil trading company Strong Petroleum.

Canadian dollar climbs on hawkish central bank comments; pound wobbles

The Canadian dollar rose to its highest level in nearly two months on Tuesday, buoyed by hawkish comments from Canada's central bank, while worries about UK political uncertainty dented sterling.

At one point, the Canadian dollar was at its strongest since April 17, at C$1.3274 per U.S. dollar, extending gains after climbing more than 1 percent on Monday. The loonie last traded at C$1.3293, up around 0.2 percent on the day.

Bank of Canada Senior Deputy Governor Carolyn Wilkins said on Monday first-quarter growth was "pretty impressive" and that signs economic growth was broadening would lead the central bank to consider whether current low rates would still be required.

"She delivered a much more hawkish signal than we've seen from the central bank in some time," said Sue Trinh, head of Asia FX strategy for Royal Bank of Canada's Hong Kong branch.

"Bottom-line, odds of a rate hike by the end of the year from the Bank of Canada have moved up considerably," Trinh said, adding that markets were now pricing in more than a 50 percent chance.

Sterling was still looking wobbly after the shock result of Thursday's UK general election, which left Prime Minister Theresa May short of a parliamentary majority that would have strengthened her hand as Britain prepares for Brexit negotiations with Europe.

The pound eased 0.1 percent to $1.2653 , after shedding 2.3 percent the previous two trading days.

"The prospect of further political uncertainty due to the lack of an overall Conservative majority is likely to weigh on sterling in the short term," said Jeremy Gatto, senior vice president, trading, for Geneva-based boutique asset manager Unigestion.

On the other hand, the potential for "softer Brexit" rhetoric in a market that is already short on sterling could help support the currency over the medium-term, Gatto added.

The greenback was steady to firmer against the yen and the euro ahead of the Federal Reserve's two-day policy meeting starting later on Tuesday.

Against the yen, the dollar held steady at 109.97 . The euro eased 0.1 percent to $1.1193.

With the U.S. central bank widely expected to raise interest rates, investors' focus will be on any fresh hints on the pace of tightening in the months to come, and its assessment of the economy and outlook on inflation.

Investors will also be watching for any fresh details on the Fed's plans for trimming its balance sheet.

"Given that the minutes (of the last Fed meeting) contained lots of details, one possible scenario is that there will be an announcement in June and that it will start in September," said Masafumi Yamamoto, chief currency strategist for Mizuho Securities in Tokyo, referring to the Fed's possible balance sheet reduction.

Elsewhere, the Bank of England is set to announce an interest rate decision on Thursday, and the Bank of Japan holds a policy meeting on Thursday and Friday.

Oil rises on Saudi pledge to make real supply cuts to Asia, U.S.

Oil prices edged up on Tuesday, lifted by statements that Saudi Arabia was making significant supply cuts, although rising U.S. output meant that markets remain well supplied.

Brent crude futures (LCOc1) were at $48.52 per barrel at 0510 GMT, up 23 cents, or 0.5 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures (CLc1) were at $46.27 per barrel, up 19 cents, or 0.4 percent.

Saudi Arabia, the world's top oil exporter, is leading an effort by the Organization of the Petroleum Exporting Countries (OPEC) to cut production by almost 1.8 million barrels per day (bpd) until the end of the first quarter of 2018 in order to prop up prices. Other countries, including top producer Russia, are also participating.

During the first half of the year, there were doubts over OPEC's compliance with its own pledges, as supplies remained high.

Saudi officials now say they are making real cuts, including 300,000 bpd to Asia for July, although several Asian refiners said they were still receiving their full allocations.

"Oil attempted to rally... as Saudi Arabia announced cuts to shipments to the United States and Asia," said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.

OPEC's exports have been falling since the start of the cuts in January, although some members such as Libya and Nigeria are exempt from the cuts and there have been doubts over the compliance of others, including Iraq.

Trade data shows that OPEC shipments to customers averaged around 26 million bpd in the last six months of 2016, while they are set to average around 25.3 million bpd in the first half of this year.

Threatening to undermine OPEC's efforts is rising U.S. drilling activity , which has driven up output in the United States by more than 10 percent since mid-2016, to over 9.3 million bpd.

The U.S. Energy Information Administration says production will rise above 10 million next year, challenging top exporter Saudi Arabia.

Overall, oil markets remain well supplied.

Reflecting the perception that global oil supplies are ample, the Brent forward curve <0#LCO:> remains in a shape known as contango, with crude for delivery in half a year's time about $1.50 per barrel more expensive than that for immediate delivery, making it attractive for traders to store oil for a later sale.

"Where oil prices go will be determined by the flow of inventory data," said Greg McKenna, chief market strategist at Australian futures brokerage AxiTrader.

While prices were up on Tuesday, crude has lost 10 percent of its value since late May when OPEC announced it would extend its production cuts.

Asia shares dragged under by U.S. tech slide, dollar firm

Asian stocks fell on Monday, with electronics heavyweights such as Samsung Electronics knocked lower by a slide in U.S. tech shares and caution ahead of this week's U.S. Federal Reserve policy meeting.

Spreadbetters expected European shares to follow suit, forecasting lower openings for Britain's FTSE (FTSE), Germany's DAX (GDAXI) and France's CAC (FCHI).

MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) was down 0.8 percent, with the tech index <.MIAP0IT00PUS> sliding 1.5 percent.

Technology stocks sold off sharply on Wall Street on Friday on concerns about Apple's (O:AAPL) new iPhones and a cautious Goldman Sachs (NYSE:GS) report about the stocks, prompting heavy profit taking after an extended rally. (N)

Asia's tech giants followed suit on Monday, with South Korea's Samsung Electronics (KS:005930) losing 1.8 percent, Taiwan Semiconductor Manufacturing Co (TW:2330) down 1.6 percent and Japan's Sharp Corp (T:6753) shedding 2.7 percent.

Japan's Nikkei (N225) was down 0.6 percent and South Korea's KOSPI slid 1.2 percent. Hong Kong's Hang Seng (HSI) lost 1.3 percent while Shanghai (SSEC) fell 0.5 percent.

Electronics shipments have helped lead an export revival for many of Asia's trade-reliant economies.

"The drop on Nasdaq appears to be taking a toll today. But the tech sector was strong and perhaps ready for profit taking, with the Fed meeting also approaching," said Yoshinori Shigemi, global market strategist at JPMorgan (NYSE:JPM) Asset Management.

"One day of losses on Wall Street does not change the broader picture but it has managed to dampen sentiment."

The Fed will begin a two-day meeting ending on Wednesday at which it is widely expected to hike interest rates. The focus is on whether the Fed thinks the U.S. economy is robust enough to withstand further rate increases through 2017 and how it plans to whittle down its massive balance sheet.

A rate hike accompanied by a message suggesting that the Fed may raise rates more than expected in 2017 would support the dollar but be negative for equity markets.

"Political events like the UK election and Comey's testimony are over and the focus this week shifts to monetary policy," said Junichi Ishikawa, senior forex strategist at IG Securities in Tokyo.

"The equity markets and the dollar have mostly priced in the Fed signalling three rate hikes in 2017. That explains why U.S. equities have held up. But if the Fed hints at more than three hikes, that could trigger a sell-off in equities that many are bracing for."

Equities navigated through last week's potential landmine events relatively unscathed.

Congressional testimony by former FBI Director James Comey caused few market ructions, and the fallout of Britain's surprise parliamentary election result, at which the ruling party lost the majority, was mostly contained to the pound.

Sterling was a shade higher at $1.2755 on Monday after sliding 1.7 percent on Friday, when it plumbed a near two-month low of $1.2636.

The pound appeared to be taking a breather as British Prime Minister Theresa May scrambled to reunite her Conservative Party, attempting to strike a deal with a small Northern Irish party that would enable her to stay in power. Talks on Britain's exit from the European Union are due to start next Monday. [FRX/]

The dollar was steady at 110.300 yen . The euro inched up 0.1 percent to $1.1206 following three straight days of losses against the greenback.

The dollar index against a basket of currencies was little changed at 97.200 (DXY) following its rise on Friday to a 9-day high of 97.500.

The U.S. currency received support as Treasury yields, at seven-month lows early last week at the height of investor jitters towards the UK elections and Comey's testimony, continued their bounce ahead of the Fed's anticipated rate hike.

In commodities, crude oil prices extended gains after rising on Friday when a pipeline leak in major producer Nigeria overshadowed supply worries weighing on the market. [O/R]

U.S. crude (CLc1) and Brent (LCOc1) were both 0.6 percent higher at $46.10 and $48.45 a barrel, respectively.

Gold down in Asia with Fed meeting this week in focus

Gold prices fell in Asia on Monday with views ahead of the June policy review by the Fed key for the precious metal.

Gold for August delivery dipped 0.21% to $1,268.75 at troy ounce on the Comex division of the New York Mercantile Exchange.

In the week ahead, investors will be turning their attention to Wednesday’s Federal Reserve policy meeting, where the central bank is widely expected to deliver its second rate hike so far this year. Markets will also be watching central bank meetings in the UK, Japan and Switzerland.

Last week, gold prices fell for a third day on Friday as the stronger dollar weighed after British elections failed to deliver a clear majority for Prime Minister Theresa May, sending sterling sharply lower.

The shock UK election result added to political risks surrounding the upcoming Brexit negotiations, due to start on June 19, sending sterling tumbling. That, along with a drop in the euro, pushed the dollar higher against a basket of the other major currencies.

Gold and the dollar typically move in opposite directions, which means if the dollar goes down, gold futures, which are denominated in the U.S. currency, will rise. The dollar indexplumbed seven-month lows earlier in the week amid caution ahead of former FBI Director James Comey's testimony and the UK election. Investing.com's Fed rate monitor tool widely sees a rate hike.

On Thursday, Comey accused President Donald Trump of firing him in a bid to undermine a probe into Russia’s alleged involvement in the U.S. presidential election, but did not say whether he thought the president attempted to obstruct justice.

Sterling stunned by UK election shock, fallout limited elsewhere

Sterling spiraled lower on Friday as British elections left no single party with a clear claim to power, sideswiping investors who had already weathered major risk events in the United States and Europe.

With the majority of seats counted in the snap vote, British Prime Minister Theresa May had no way to win an outright majority in parliament.

The shock outcome saw the pound shed 2 percent on fears the political turmoil could delay and confound talks on leaving the European Union, which are due to start in less than two weeks.

Yields on 10-year gilts fell 3 basis points to 1.00 percent, but FTSE futures (FFIc1) recouped early losses and turned 0.2 percent higher, perhaps on hopes that a weaker pound would help the economy.

The damage was limited elsewhere, with E-mini futures for the S&P 500 (ESc1) edging up 0.1 percent.

Japan's Nikkei (N225) added 0.5 percent and MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) were all but flat.

"This is messy for the UK economy and its Brexit negotiations and hence is a negative for the pound and share market," said Shane Oliver, chief economist at AMP.

"But the UK is just 2.5 percent of world GDP and it's hard to see significant implications for global investment markets."

By 0555 GMT sterling had skidded to $1.2697 , having carved out a two-month trough of $1.2689. It was also down 1.8 percent on the euro at 88.18 pence (EURGBP=).

The rot started when an exit poll showed the ruling Conservatives could fail to win a clear majority when markets had expected a handy victory.

The BBC forecast the Conservatives would hold a reduced 318 seats in the 650-member parliament, following a big swing to the left-leaning opposition Labour Party. For the latest updates, click.

Betting agencies were already taking wagers on whether May would still have her job by the end of the day.

"At this stage, there is no obvious way a formal, stable coalition government can be constructed, and therefore there is a high likelihood of a potentially prolonged period of uncertainty over who will be prime minister," said John Wraith, a strategist at UBS.

Yet he cautioned bears against chasing the pound much lower from here.

"Today's result will in part be seen as a vote against a definitive break from the EU, and the market may soon begin to reassess the probability of a so-called 'hard Brexit'."

There was much less drama elsewhere, as the Japanese yen gave up early gains and eased to 110.20 per dollar . The euro was little moved against the U.S. dollar at $1.1209 .

The single currency had slipped overnight when the European Central Bank cut forecasts for inflation and said it had not discussed scaling back its massive bond-buying campaign, sending bond yields to multi-month lows.

NO SMOKING GUN

Overnight, Wall Street had seemingly judged the testimony of former FBI director James Comey was not life-threatening to the administration of President Donald Trump.

Comey accused Trump of firing him to try to undermine the investigation into possible collusion by his campaign team with Russia's alleged efforts to influence the 2016 election.

"I think the market is taking less of an alarmist review of this situation because there is no smoking gun here," said Jefferies & Co money market economist Thomas Simons.

"So it's not particularly impactful for thinking about... Trump's economic agenda to go through."

The Dow (DJI) rose 0.04 percent, while the S&P 500 (SPX) gained 0.03 percent and the Nasdaq Composite (IXIC) 0.39 percent.

In commodity markets, spot gold was 0.3 percent lower at $1,274.45 an ounce.

Oil prices remained subdued with Brent having settled at its lowest since Nov. 29, the eve of an OPEC production cut deal.

U.S. crude futures (CLc1) edged down 2 cents to $45.62 a barrel, with Brent crude (LCOc1) flat at $47.86.

Gold prices slide lower on stronger dollar

Gold prices slid lower on Friday, as the dollar regained some ground after Thursday’s three major risk events, although markets were still awaiting the final results of the U.K. election.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery were down 0.31% at $1,275.51.

The August contract ended Thursday’s session 1.06% lower at $1,279.50 an ounce.

Futures were likely to find support at $1,261.30, the low of June 2 and resistance at $1,291.50, Thursday’s high.

The greenback gained ground after former FBI director James Comey in testimony on Thursday accused President Donald Trump of firing him to try to undermine his investigation into possible collusion by the Trump campaign team with Russia's alleged efforts to influence the 2016 presidential election.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.29% at 97.22, just off a one-and-a-half week high of 97.36.

A stronger U.S. dollar usually weighs on gold, as it weakens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.

Markets were also still digesting the European Central Bank’s decision on Thursday to cut its forecast for inflation this year to 1.5%, down from 1.7% in March.

The forecast came after the central bank left interest rates unchanged in a widely expected move.

But gold’s losses were limited after U.K. Prime Minister Theresa May's Conservative Party lost its parliamentary majority in Thursday’s general election, potentially disrupting Brexit negotiations.

May faced calls to leave the government on Friday after the election left no single party with a clear claim to power just 10 days ahead of the start of Brexit negotiations.

Elsewhere in metals trading, silver futures for July delivery declined 0.51% to $17.325 a troy ounce, while copper futures for July delivery was little changed at $2.608 a pound.

Euro awaits ECB, sterling hits 2-week high on UK election day

The euro steadied near six-month highs on Thursday ahead of a European Central Bank policy announcement while sterling set a two-week high as markets priced in a victory for Britain's Conservative Party in national elections.

The euro has risen 10 percent against the dollar in the past five months, partly due to the greenback's weakness but also on the view that rising inflation would prompt the ECB to raise interest rates in early 2018.

But reports on Wednesday that the ECB would cut its inflation forecasts have dampened expectations of the bank's language veering toward a pullback of its stimulus program, also known as quantitative easing (QE), later this year.

The ECB is widely expected to keep policy unchanged on Thursday, including its 2.3 trillion euro ($2.59 trillion) bond-buying program.

Valentin Marinov, head of FX strategy at Credit Agricole (PA:CAGR) said that a downward revision to the ECB's core inflation path could dash hopes of a QE taper announcement as soon as September, adding he expected the ECB to deliver a relatively dovish message compared with expectations.

"On the whole, a return of the ECB’s cautious rhetoric on the euro, plus a revision of the inflation projections and the dovish language that Draghi will likely use even when he's conveying a fairly constructive assessment of the improving euro zone outlook could weigh on the single currency," he said.

By 0806 GMT, the euro was up less than 0.1 percent at $1.1259 <EUR=EBS>.

Sterling traded at $1.2969 , staying near a peak of $1.2978 hit in morning European trade, its highest level since May 25.

Opinion polls on Wednesday showed that Prime Minister Theresa May is on course to increase her majority in parliament in Thursday's election, suggesting her gamble to call the vote to strengthen her position in Brexit negotiations will pay off.

"Markets appear to be pricing in a Conservative Party majority victory," said Jasslyn Yeo, market strategist in Singapore for J.P. Morgan Asset Management.

If the Conservative Party gains a decisive majority of more than 50 seats, that would probably be seen as a positive outcome for sterling, Yeo said.

"However, we still see much uncertainty surrounding the UK election, where a higher turnout vote of young people could potentially turn the tables on investors," she added.

Investors will closely monitor U.S. Senate testimony by former FBI Director James Comey later on Thursday, worried his testimony could dampen already flagging momentum for President Trump's agenda of rolling back regulation and overhauling the tax code. In written testimony released on Wednesday, Comey - who was abruptly fired by Trump in May - said that the president asked him to drop an investigation of former National Security Adviser Michael Flynn as part of a probe into Russia's alleged meddling in the 2016 presidential election.

The dollar slipped 0.3 percent to 109.72 yen <JPY=EBS>, edging back in the direction of Wednesday's low of 109.115 yen, its lowest level in about seven weeks.

Traders said the yen edged higher after Bloomberg reported on Thursday, citing unnamed sources, that the Bank of Japan was re-calibrating its communications to acknowledge that it is thinking about how to handle a future exit from monetary stimulus.

Oil plunges almost 5% as crude stocks rise for first time in 9 weeks

Oil prices plunged to the lowest level in around a month in North American trading on Wednesday, after data showed that U.S. crude supplies rose for the first time in nine weeks, underlining worries over a global supply glut.

The U.S. West Texas Intermediate crude July contract was at $46.09 a barrel by 10:35AM ET (1435GMT), down $2.10, or around 4.4%, after falling to its lowest since May 10 at $45.98. Prices were at around $47.61 prior to the release of the inventory data.

Elsewhere, Brent oil for August delivery on the ICE Futures Exchange in London sank $1.82 to $48.28 a barrel, a level not seen since May 5.

The U.S. Energy Information Administration said in its weekly report that crude oil inventories rose by 3.3 million barrels in the week ended June 2.

Market analysts' expected a crude-stock decline of 3.4 million barrels, while the American Petroleum Institute late Tuesday reported a supply-drop of about 4.6 million barrels.

Supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, decreased by 1.4 million barrels last week, the EIA said.

Total U.S. crude oil inventories stood at 513.2 million barrels as of last week, which the EIA considered to be at the upper half of the average range for this time of year.

The report also showed that gasoline inventories increased by 3.3 million barrels, disappointing expectations for a gain 580,000 barrels.

For distillate inventories including diesel, the EIA reported a rise of 4.4 million barrels.

Meanwhile, investors continued to weigh the impact of diplomatic tensions between Qatar and other Middle Eastern nations, including Saudi Arabia, on an OPEC-led push to tighten the market.

With oil production of about 620,000 barrels per day, Qatar's crude output ranks as one of the smallest among OPEC producers, but tension within the cartel could weaken an agreement to hold back production in order to prop up prices.

Last month, OPEC and some non-OPEC producers extended a deal to cut 1.8 million barrels per day in supply until March 2018.

Concerns that the ongoing rebound in U.S. shale production could derail efforts by other major producers to rebalance global oil supply and demand remained in focus.

Elsewhere on Nymex, gasoline futures for July dropped 2.9 cents, or about 1.9%, to $1.496 a gallon, while July heating oil slipped 4.0 cents to $1.425 a gallon.

Natural gas futures for July delivery rose 0.8 cents to $3.050 per million British thermal units.