Oil prices edged lower Wednesday after U.S. crude stockpiles increased last week, a reminder to major oil producers that the global glut could persist if they fail to agree on a cut to production next month.
Brent crude, the global oil benchmark, fell 0.76% to $48.36 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures shed 0.52% to $46.11 a barrel.
The American Petroleum Institute reported on Tuesday that U.S. crude stocks rose by 942,000 barrels in the week ended Aug. 26. The industry group also forecast gasoline stocks to have fallen by 1.6 million barrels, though distillate inventories overall grew by 3 million barrels.
The U.S. Energy Information Administration will release official numbers later on Wednesday.
A poll by The Wall Street Journal showed analysts expect the EIA to report that crude stockpiles rose by 1.2 million barrels in the week ended Aug. 26, while supplies of gasoline are also expected to decline.
For over two years, the global oil market has been roiled by a tenacious surplus of crude. The Organization of the Petroleum Exporting Countries has announced plans to meet in late September to discuss taking action to raise oil prices. The group met in April to discuss a production freeze but the talks fell apart.
A number of OPEC producers have signaled a willingness to discuss curtailing production in an upcoming meeting in September, but other major producers, most notably Iran, have rejected the idea of capping production to support the price of crude.
“The whole freeze talks, the market is extremely focused on that and any statement that adds to fears that there won’t be a deal adds to pressure on prices,” said Amrita Sen, the chief oil analyst at Energy Aspects.
On Tuesday, Iraq’s Prime Minister Haider ah-Abadi said OPEC’s second-largest producer is supportive of an output cap. Until now, Iraq was seen as a potential impediment to a deal because its production has soared and it desperately needs oil revenue to fight a war against Islamic State.
While prices have risen from a 13-year low seen in February, investors are still skittish about the market’s near-term growth, given that most heavyweight OPEC producers remain stubborn about their market share-first tactics.
Crude oil pipelines stand at the U.S. Department of Energy’s Bryan Mound Strategic Petroleum Reserve in Freeport, Texas. ENLARGE
Crude oil pipelines stand at the U.S. Department of Energy’s Bryan Mound Strategic Petroleum Reserve in Freeport, Texas. Photo: Bloomberg News
Iran has repeatedly snubbed a proposal for a collective production freeze, saying it would continue to pump until its output is on par with that before sanctions. Analysts expect Iran to maintain that stance when the 14-member OPEC bloc meets in Algeria next month. A Bloomberg report said Iran plans to boost its output by 200,000 barrels a day by the end of the year. In July, Iran’s daily output was at 3.6 million.
Without Iran’s commitment, Saudi Arabia is unlikely to agree to a production freeze pact as the kingdom has said a pact must be agreed to by all members.
Nymex reformulated gasoline blendstock—the benchmark gasoline contract—fell 1.30% to $1.36 a gallon. ICE gas oil changed hands at $425.25 a metric ton, down $2.75 from the previous settlement.