On May 13, 2009, the contract fell 83 cents, or 1.4%, to settle at $58.02 a barrel.

It was the biggest decline since April 27, 2009. Prices initially increased after an Energy Department report showed that US supplies fell for the first time in 10 weeks.

OPEC raised oil production in April 2009, exceeding the group’s quota by 967,000 barrels a day. Stocks dropped in the US, after the commerce department said that purchases at stores decreased 0.4%.

“Oil is facing pressure from a surprise increase in OPEC supply and a downswing in the major indexes,” said Mike Sander, an investment adviser at Sander Capital Advisors Inc. in Seattle. “The energy market may not be ready for $60 oil.”

Oil touched $60.08 on May 12, 2009, the highest in six months.

The Standard & Poor’s 500 Index dropped 2.7% to 883.92 and the Dow Jones Industrial Average dropped 2.2% to 8,284.89.

Economists forecast that the Commerce Department report would show that retail sales were unchanged, according to the median of 67 projections in a news survey.

OPEC Production

“The international macro data released last night was not supportive for the oil price, although the U.S. EIA inventory data show a sharp fall in crude inventories,” said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney.

The 11 OPEC members bound by targets implemented 77% of planned output cuts of 4.2 million barrels a day, down from a revised 82% for March 2009, the Vienna-based organization said in a monthly report.

Those 11 nations, which exclude Iraq, produced 25.812 million barrels a day in April, the report said, citing secondary sources, which include estimates from analysts and news organizations. That compares with 25.587 million a day in March 2009. The nations have a target of 24.845 million barrels a day that took effect from January 1, 2009.

The 12-member group will take into concern the recent raise in oil prices when it meets on May 28, 2009 to decide whether a cut in production is needed to support prices, said Shokri Ghanem, the chairman of Libya’s National Oil Corp.

Brent crude oil for June 2009 settlement dropped 14 cents, or 0.2%, to $57.20 a barrel on London’s ICE Futures Europe exchange at 9:59 a.m. Singapore time.