Oil prices fall on rising U.S. crude stocks, 2017 overhang
LONDON Oil prices fell on Wednesday following a reported rise in U.S. crude inventories and as OPEC signaled a growing crude surplus next year unless production cuts are implemented.
International Brent crude futures were down 82 cents at $54.90 per barrel at 1334 GMT, while U.S. West Texas Intermediate (WTI) crude oil futures were down 92 cents at $52.06 a barrel.
Traders said the price falls followed an industry report of surprise increases in U.S. crude inventories.
Data from the American Petroleum Institute showed U.S. crude inventories rose by 4.7 million barrels in the week to Dec. 9, compared with analysts’ expectations for a 1.6-million-barrel decline. Official inventory data from the U.S. Energy Information Administration will be released later on Wednesday.
The Organization of the Petroleum Exporting Countries on Wednesday signaled a growing oil supply surplus next year unless members implement their deal to curb output from record levels and outside producers also deliver on cutback pledges made at the weekend.
In a monthly report, OPEC said that without cuts the 2017 overhang would reach 1.24 million bpd, about 300,000 bpd higher than the forecast in its previous report.
OPEC pumped 33.87 million bpd last month, according to figures OPEC collects from secondary sources, up 150,000 bpd from October.
Saudi Energy Minister Khalid al-Falih said on Wednesday it would take some time for the market to recover after the deal between OPEC and rival producers to limit supplies.
“We expect the impact … in terms of fundamentals to take several months to be reflected on the market,” Falih told reporters.
OPEC and 11 producing countries from outside the group agreed to cut almost 1.8 million bpd of production in an effort to end two years of oversupply and cheap oil.
The International Energy Agency said global oil supply rose to a record 98.2 million bpd in November, with OPEC’s production offsetting declines elsewhere.
This stands against expectations of 96.95 million bpd of global oil demand for the fourth quarter of 2016.
Despite this, the IEA said that due to increased demand, oil markets could show a shortfall of 600,000 bpd early next year if producers stick to their reduction plans.
Markets were also focused on an anticipated U.S. interest rate hike that would likely boost the dollar, making dollar-traded fuel imports more expensive for countries using other currencies.
(Additional reporting by Henning Gloystein in Singapore; Editing by Dale Hudson and Alexander Smith)
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