Oil traded near US$74 a barrel in New York as Saudi Arabia’s pledges to boost supply assuaged concerns of a shortage, while a decline in crude stockpiles in the U.S. inflamed them.
Futures slipped 0.4 per cent after earlier adding 1 percent. The American Petroleum Institute was said to report that inventories dropped by 4.51 million barrels last week, while a Bloomberg survey also estimated a decline. The Saudi Cabinet affirmed the kingdom is ready to use its spare capacity as needed, while Energy Minister Khalid Al-Falih reiterated with Russia that OPEC’s agreement with allies is to boost output by 1 million barrels a day.
Oil is trading near levels last seen in 2014 as supply disruptions from Libya to Canada and Venezuela are seen outweighing output gains by the Organization of Petroleum Exporting Countries. Morgan Stanley raised its Brent crude forecast to $85 a barrel next year, while U.S. President Donald Trump continued to push top OPEC producer Saudi Arabia to pump more and reduce petroleum prices for consumers.
“Bulls are regaining control,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. in London. “It looks as though any additional supply increase from Gulf producers and Russia will not be able to replace lost barrels from Libya, Iran and Venezuela.”
West Texas Intermediate crude for August delivery traded at US$73.83 a barrel on the New York Mercantile Exchange, down 31 cents, at 9:02 a.m. local time. On Tuesday, prices breached US$75 for the first time since 2014. Total volume traded Wednesday -- a U.S. public holiday -- was 26 per cent below the 100-day average.
Brent for September settlement was up 12 cents at US$77.88 a barrel on the London-based ICE Futures Europe exchange, and traded at a US$6.36 premium to WTI for the same month.
As well as declines in nationwide stockpiles, inventories in the key U.S. storage hub of Cushing, Oklahoma, shrank by 2.6 million barrels, the API was said to report. If confirmed by government data Thursday, that would be the seventh consecutive drop. A Bloomberg survey forecast a 5 million-barrel slide in nationwide stocks.
Saudi Arabia said it would “use its spare capacity when needed to deal with any future changes in oil supply and demand rates, in coordination with other producing countries,” according to a report by the Saudi Press Agency.
Earlier, the Saudi and Russian energy ministers reaffirmed their 1 million-barrel-a-day agreement reached last month in Vienna, after Trump tweeted over the weekend that he’d received assurances from the Middle Eastern nation that it could increase production by double that volume.
Other oil-market news:
Trump’s tweets about OPEC and oil prices are more likely to worry the market and put upward pressure on prices than reassure it, Standard Chartered Plc analysts wrote in a note. Venezuela’s distressed oil industry may get some much-needed financing from China, receiving authorization for a direct investment of more than $250 million from China Development Bank for its state-owned oil company to increase production.