Oil prices fell dropped on Wednesday, prompted by a weaker oil demand outlook and a rise in U.S. crude inventories despite growing expectations of ongoing Organization of Petroleum Exporting Countries, OPEC-led supply cuts.
Brent crude futures, the international benchmark for oil prices, were down 76 cents, or 1.22 per cent at $61.53 a barrel, while the U.S. West Texas Intermediate (WTI) crude futures were down 79 cents, or 1.3 per cent, at $52.58 per barrel.
The U.S. Energy Information Administration (EIA) cut its forecasts for 2019 world oil demand growth and U.S. crude oil production in a monthly report released on Tuesday.
It reduced its 2019 world oil demand growth forecast by 160,000 barrels per day (bpd) to 1.22 million bpd, although it also wound back its forecast for 2019 U.S. crude production to 12.32 million bpd, 140,000 bpd less than the May forecast.
A surprise rise in U.S. crude stockpiles also kept oil prices under pressure.
“Investors have been concerned about the recent rise in stockpiles in the U.S.,” ANZ bank said in a note.
U.S. crude inventories unexpectedly rose by 4.9 million barrels in the week ended June 7 to 482.8 million barrels, according to data from the American Petroleum Institute (API) on Tuesday. That compared with analysts’ expectations for a decrease of 481,000 barrels.
With the next OPEC meeting few weeks away, the market is eyeing whether the world’s major oil producers would prolong their supply cuts.
The Organization of Petroleum Exporting Countries (OPEC) and some non-members including Russia, have limited their oil output by 1.2 million barrels per day since the start of the year in a bid to prop up prices.
The UAE Energy Minister Suhail bin Mohammed al-Mazroui said on Tuesday that OPEC members were close to reaching an agreement on continuing production cuts.
OPEC is set to meet on June 25, followed by talks with its allies led by Russia on June 26. But Russia suggested a date change to July 3-4, sources within the group previously told Reuters.