Seoul and Singapore – Oil prices slipped on Wednesday as bullish output forecasts by two big U.S. producers and a build in weekly U.S. crude stockpiles outweighed ongoing OPEC-led production cuts.
International Brent crude futures were at 65.36 dollars per barrel at 0440 GMT, down 50 cents or 0.8 per cent from their last settlement
U.S. West Texas Intermediate (WTI) crude oil futures were also down 0.8 per cent or 45 cents at 56.11 dollars per barrel.
“Crude oil futures continue to demonstrate whippy trades as markets balance between OPEC-led cuts and the effects of rising U.S. production levels,” said Benjamin Lu, commodities analyst at Singapore-based brokerage firm, Phillip Futures.
Increasingly event-driven trading was adding to market volatility, he added.
Chevron Corp and Exxon Mobil Corp released rival Permian Basin projections on Tuesday pointing to increased shale oil production.
If realised, the increases would cement the pair 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 U.S. crude stockpiles.
U.S. 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.
“An increase in U.S. crude inventories is weighing on oil prices and in the long term, concerns over rising oil production in the Permian region is keeping a lid on prices,” said Kim Kwang-rae, commodity analyst at Samsung Futures in Seoul.
Official data from the U.S. Department of Energy’s Energy Information Administration is due later on Wednesday.
The rise in North American production undermines supply cut efforts led by the OPEC.
OPEC and its allies pledged to curb output by 1.2 million barrels per day and they are likely to push back their decision whether or not to extend the output cut agreement to June from April, according to sources.
Meanwhile, the market is looking for further signs that the United States and China are making progress in talks to resolve their trade conflict.
U.S. 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. (Reuters/NAN)