Oil prices fall before US energy report
Oil prices fell Wednesday as traders awaited the release of US crude inventory data, which are expected to show a further rise in stockpiles.
At around 1100 GMT, the US benchmark West Texas Intermediate (WTI) for delivery in April slid 74 cents to stand at $33.66 a barrel.
In London, Brent North Sea crude for May shed 36 cents to $36.45 a barrel compared with Monday’s close.
Crude futures had risen Tuesday on fresh Russian calls for a production freeze to reduce the global supply glut.
“US crude oil inventories increasing is almost becoming a norm. Inventories are already at a historic high” and markets are taking a nonchalant stance towards a continued inch upwards, said Daniel Ang, analyst at Phillip Futures in Singapore.
“US production, on the other hand, is slightly more interesting as it is finally starting to show corrections. We highly expect to see US oil production drop a lot more now that prices are in the $30 region, which could result in the easing of global oil supply,” he added in a note.
A Bloomberg News survey ahead of Wednesday’s Energy Information Administration (EIA) report showed that US crude stockpiles probably increased 3.4 million barrels from an 86-year high last week.
The EIA is projected to report that supplies of gasoline and distillate fuel, a category that includes diesel and heating oil, dropped, Bloomberg added.
Oil prices had risen Tuesday on increasing optimism of an output freeze to shore up the market as Russia said domestic oil groups supported the proposal.
Opening a meeting with Russian oil group chiefs, President Vladimir Putin said Energy Minister Alexander Novak had led discussions on forging a freeze agreement between producer countries.
He said the idea was to “fix Russia’s 2016 production level at that of January,” which was a post-Soviet record of 10.8 million barrels per day on average.
The market gained a lift in the latter half of February when OPEC kingpin Saudi Arabia and non-OPEC member Russia agreed to freeze output to January levels, if other major producers followed suit.
But disappointment that there was no output cut, and skepticism that such a freeze could be agreed, has contributed to recent market volatility.
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