Oil prices fell more than 0.5 per cent on Wednesday as bullish output forecasts by two big US producers outweighed recent OPEC-led efforts to rein in crude production.
US West Texas Intermediate (WTI) crude futures were at $56.15 per barrel, down 41 cents, or 0.7 per cent. WTI futures closed little changed on Tuesday.
International Brent futures had yet to trade after closing up 0.3 per cent on Tuesday.
“Oil is likely to play ‘tug of war’ here, with production cut promises to be countered with rising output from the US,” said Edward Moya, senior market analyst, OANDA.
Chevron Corp and Exxon Mobil Corp released duelling Permian Basin projections on Tuesday pointing to big increases in shale oil production.
If realized, the increases would cement the rivals as the dominant players in the West Texas and New Mexico field, with one-third of Permian production potentially under their control within five years.
Data from the American Petroleum Institute (API), an industry group, also showed larger-than-expected US crude stockpiles.
US crude inventories rose by 7.3 million barrels in the week ending March 1 to 451.5 million, compared with analysts’ expectations for an increase of 1.2 million barrels, API said. Crude stocks at the Cushing, Oklahoma, delivery hub rose by 1.1 million barrels.
The rise in North American production added to concerns over a much anticipated US-China trade deal.
US Secretary of State Mike Pompeo said President Donald Trump would reject any trade deal that is not perfect, but added the White House would keep working on an agreement.