Oil prices dipped on Wednesday as rising crude stocks in the United States underscored an ongoing global fuel supply overhang despite an OPEC-led effort to cut output. Prices for front-month Brent crude futures, the international benchmark for oil, were at $50.92 per barrel at 0051 GMT, down 4 cents from their last close.
US West Texas Intermediate (WTI) crude futures were down 8 cents at $48.16 a barrel. “Crude oil prices fell as concerns over rising U.S. inventories resurfaced… Rising exports in Libya also weighed on prices,” ANZ bank said on Wednesday.
U.S. crude oil inventories rose by 4.5 million barrels in the week to March 17 to 533.6 million, the American Petroleum Institute (API) said late on Tuesday.
The bloated storage comes as U.S. oil production <C-OUT-T-EIA> has risen over 8 percent since mid-2016 to more than 9.1 million barrels per day (bpd) to levels comparable in late 2014, when the oil market slump started.
Rising production in the United States and elsewhere, and bloated inventories, are undermining efforts led by the Organization of the Petroleum Exporting Countries (OPEC) to cut output and prop up prices.
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“2017-19 is likely to see the largest increase in mega projects production in history,” Goldman Sachs said in a note to clients on Tuesday.
“Led by U.S. shales, (this) could create a material oversupply in 2018-19. As OPEC prepares for its May 25 meeting, it is likely to weigh the relative benefit of stability (extend the cut) vs. the risk of long-term (market) share loss,” the bank added.