London. — Oil prices slipped back towards three-month lows yesterday after data showed US crude inventories rising faster than expected, piling pressure on Opec to extend output cuts beyond June.
A deal between the oil cartel and some nonOpec producers to reduce output by 1,8 million barrels per day in the first half of 2017 has had little effect on bulging global stockpiles of oil.
Brent crude, the international benchmark, fell 35 cents to $50,61 per barrel by 9,07am GMT, heading back to its lowest level since Opec announced its plan for cuts, on November 30. The deal with nonOpec countries was reached in December.
US light crude was down 35 cents at $47,89 a barrel, also heading back towards a three-month low.
“The lower the price goes, the higher the pressure on Opec to extend cuts,” Commerzbank analyst Carsten Fritsch said.
Sources have said Opec was inclined to extend but wants backing from non-OPEC producers, including Russia, even though such countries have yet to deliver fully on existing cuts.
On Tuesday, the American Petroleum Institute reported that US inventories had climbed by 4,5 million barrels to 533,6 million last week, a bigger rise than the 2,8-million that analysts forecast.
Investors now want to see whether yesterday’s figures from the Energy Information Administration, a unit of the Department of Energy, confirm the rise.
“A look below $50 (for Brent) was quite possible yesterday if department of energy data show a similar pattern, but it’s impossible to say how far below $50,” Commerzbank’s Fritsch said.
US shale oil producers have been adding rigs, pushing up the country’s oil production to about 9,1-million barrels per day, from about 8,5-million barrels per day in late 2016.
“Opec’s market intervention has not yet resulted in significant visible inventory drawdowns, and the financial markets have lost patience,” US bank Jefferies said in a note.
The bank said Opec-led cuts would start having an effect in the second half of 2017, but added that US crude production was expected to grow by 360 000 barrels per day in 2017 and 1 million barrels per day in 2018.
US bank Goldman Sachs warned its clients in a note this week that a US shale-led production surge “could create a material oversupply in 2018-19”. — Reuters.