Oil prices fell to under $63 a barrel on Monday after Saudi Arabian Oil Minister Ali al-Naimi said production in the world's biggest crude exporter would stay near record peaks around 10 million barrels per day (bpd) in April.
"I have said many times we will always be happy to supply to our customers with what they want. Now they want 10 million," Naimi told Reuters on Monday in Seoul, where he is due to attend a board meeting of the state oil firm Saudi Aramco.
Naimi earlier this month said Saudi Arabia produced 10.3 million bpd of crude in March, eclipsing a previous record of 10.2 million bpd, in what is seen as a move to defend market share against non-OPEC competition, including the United States.
Brent crude was trading down 82 cents at $62.63, down from an intraday peak of $64.34 Monday. US crude for May delivery was down 42 cents at $55.32 a barrel, down from an early high of $56.65. US oil drilling rigs fell for a record 19th straight week to the lowest since 2010, data from oil services firm Baker Hughes showed, which has helped lift prices from six-year lows reached in January.
Since the beginning of April, oil prices have risen around 17 percent, pushed up by reports of a possible dip in US output, but Morgan Stanley warned that Saudi production could be more important than developments in the United States.
"We worry about the market's fixation on the US ... OPEC production may be more important as production increased one million barrels per day month-on-month in March. Saudi Arabia alone added the equivalent of half of Bakken (the largest US shale oilfield) production in a matter of months – far beyond any US slowdown," the bank said in a note.
