Oil prices fell on Wednesday, pulled down by rising supplies in the United States and expectations that voluntary output cuts led by producer cartel OPEC could be loosened. Brent crude futures, the international benchmark for oil prices, were at $75.65 per barrel at 0329 GMT, down 23 cents, or 0.3 percent, from their last close. U.S. West Texas Intermediate (WTI) crude futures were at $65.99 a barrel, down 37 cents, or 0.6 percent, from their last settlement.
The Organization of the Petroleum Exporting Countries (OPEC), together with some non-OPEC producers including Russia, started withholding output in 2017 to reduce a global supply overhang and push up prices. OPEC on Tuesday said that the oil market outlook in the second-half of 2018 is highly uncertain and warned of downside risks to demand. The group is due to meet on June 22 in Vienna, Austria, to discuss future production policy.
“The prospect of easing supply curbs from OPEC-led producers continues to be reflected in oil’s overall depressed price action,” said Lukman Otunuga, analyst at futures brokerage FXTM. In the United States, the American Petroleum Institute (API) reported on Tuesday that crude oil inventories rose by 830,000 barrels in the week to June 8, to 433.7 million.
The rising stocks are in part a result of the surge in U.S. crude oil production <C-OUT-T-EIA>, which has jumped by 28 percent in the last two years, to a record 10.8 million barrels per day (bpd). With output in Russia rising back above 11 million bpd in June and Saudi production climbing back above 10 million bpd, supplies from the top three producers are increasing.
“With rising production from U.S. shale adding to oil’s woes and reviving oversupply concerns, further downside could be a possibility in the short to medium term,” Otunuga said. Official U.S. production and inventory data is due to be published on Wednesday by the Energy Information Administration (EIA).