Oil prices skid amid rumors of OPEC output hike

New York's main contract, WTI light sweet crude for delivery in July, finished the trading session at $99.01 a barrel, a loss of $1.21 from Friday's closing level.

In London, Brent North Sea crude for July delivery shed $1.36 to settle at $114.48 a barrel.

"The market is very responsive to outside market influence," said Rich Ilczyszyn of futures brokerage Lind-Waldock.

On Wall Street, stock markets were extending five straight weeks of losses.

Still, at about $100 a barrel, the oil market is "overpriced," Ilczyszyn said.

"This is probably the wrong time of the year for the market to cave in because of the potential geopolitical unrest in the Middle East, the (Atlantic) hurricane season starting," he said.

The market was looking to Wednesday's meeting in Vienna of the Organization of the Petroleum Exporting Countries, the 12-nation cartel that pumps about 40 per cent of global supply.

Most analysts expected the cartel would leave production quotas unchanged, despite a surge in crude oil prices spurred by unrest in the Arab world, particularly in Libya.

But OPEC kingpin Saudi Arabia is "promising to increase oil production against the wishes of Iran," said Phil Flynn at PFG Best. "The market is pricing in more OPEC oil down the road."

Tehran's representative to OPEC said Monday that the Islamic republic is against any increase in OPEC output.

"There is no need to increase production of OPEC countries at the 159th meeting of the organisation," Mohammad Ali Khatibi was quoted as saying on the state television website.

"The market is balanced... the downward trend in oil prices means that producers must be very cautious before any increase in output," he said.

OPEC's second-biggest crude producer, Iran favors high oil prices and traditionally opposes an increase in production of the cartel.

The country currently holds the rotating OPEC presidency for the first time since the 1979 Islamic revolution.

Tehran's new caretaker oil minister Mohammad Aliabadi will make his first appearance at the meeting Wednesday, the ministry's news agency Shana reported.

Flynn also noted that last Friday's dismal US May jobs report had "obliterated" demand expectations in the United States and elsewhere.

"People are worried about a double-dip recession, about demand not being there," he said. "You are seeing signs of slowdown in China, in the US, across the globe."