Oil prices
fell on Wednesday after data showed a build in U.S. crude stocks and OPEC
reported a rise in its production despite its pledge to cut back on output.
Brent crude
futures LCOc1 were at $48.41 per barrel at 0652 GMT, down 31 cents, or 0.6
percent, from their last close.
U.S. West
Texas Intermediate (WTI) crude futures CLc1 were at $46.10 per barrel, down 36
cents, or 0.8 percent.
Crude prices
have fallen by more than 10 percent since late May, pulled down by an supply
glut that persists despite a move led by the Organization of the Petroleum
Exporting Countries (OPEC) to cut production by almost 1.8 million barrels per
day (bpd) until the end of the first quarter of 2018.
OPEC's own
compliance with the cuts has been questioned, and the producer group said in a
report this week that its output rose by 336,000 bpd in May to 32.14 million
bpd.
ANZ bank
said in a note to clients that prices were "under pressure earlier in the
day after a report from OPEC showed that its production had increased."
Adding to
the supply surplus is rising U.S. production from shale drillers that has
pushed U.S. output up by 10 percent over the last year to 9.3 million bpd, not
far below levels by top exporter Saudi Arabia. C-OUT-T-EIA
"The
outlook for oil hinges on the effectiveness of the OPEC cuts relative to the
supply increases from U.S. shale," said William O'Loughlin, analyst at
Australia's Rivkin Securities.
Data from
the American Petroleum Institute showed on Tuesday that U.S. crude stocks rose
by 2.8 million barrels in the week to June 9 to 511.4 million, compared with
expectations for a decrease of 2.7 million barrels. [API/S]
With
supplies plentiful, strong demand is needed to support the market, but there
are signs of a slowdown.
Global
energy demand grew by 1 percent in 2016, a rate similar to the previous two
years but well below the 10-year average of 1.8 percent, BP (BP.L) said in its
benchmark Statistical Review of World Energy on Tuesday.
More
specifically for oil, there are signs of a slowdown in China, long the key
component of fuel demand growth, as its economy slows. The nation's refiners
have produced too much fuel for it to consume, forcing a drop-off in activity.
"Chinese
demand is slow ... so we have a build-up of crude in Asia where demand seems to
have slowed for now," said Oystein Berentsen, managing director for oil
trading company Strong Petroleum.
REUTERS*
0 Comments