Oil falls for third day as doubts over OPEC cuts linger
Tokyo. Crude futures fell for a third day on Wednesday despite a bigger than expected fall in U.S. oil inventories reported by an industry group, with doubts lingering over OPEC's ability to restrain supply as promised. Benchmark Brent crude was down 24 cents, or 0.5 percent, at $51.90 a barrel at 0233 GMT. In the previous session, it settled down 0.4 percent.
U.S. West Texas Intermediate crude (WTI) was down 15 cents, or 0.3 percent, at $49.02 a barrel, after falling 0.4 percent on Tuesday. Crude stockpiles in the U.S. dropped more than expected last week as imports declined and refinery runs increased, while gasoline inventories increased unexpectedly, the American Petroleum Institute said late on Tuesday. Crude inventories declined by 7.8 million barrels in the week to 478.4 million, compared with analyst expectations for a decrease of 2.7 million barrels.
The U.S. Energy Information Administration will release its weekly petroleum status report at 10:30 a.m. ET (1430 GMT) on Wednesday. On Tuesday, it trimmed its forecast for gains in U.S. oil production for 2018, though it increased its outlook for output growth this year, reported Reuters. "Oil is stuck in a range of $45-$50 for WTI and a bit more for Brent," said Bob Takai, president at Sumitomo Corp Global Research in Tokyo. "U.S. shale is slowing down a bit looking at the rig count as they cannot make money when oil is under $50."
The market seems immune to bullish signs of falling stockpiles as the Organization of the Petroleum Exporting Countries (OPEC) and other major producers struggle to maintain compliance with a deal to cut output. A recovery in Libya's oil output and higher production in Nigeria have complicated OPEC's efforts to curb supply, while U.S. shale oil drillers have ramped up production. Libya and Nigeria are OPEC countries that are exempt from the agreement to limit production through March 2018.
Officials from a joint OPEC and non-OPEC technical committee said on Tuesday that they expect greater adherence to the pact to cut 1.8 million barrels per day in production. Saudi state oil company Aramco will cut allocations to its customers worldwide in September by at least 520,000 barrels per day (bpd), sources familiar with the matter told Reuters on Tuesday. "With only a few weeks left of the U.S. summer driving season, investors are starting to debate whether the current OPEC production cuts will offset the subsequent falls in demand in North America," ANZ Research said in a note.