Oil prices fell on Wednesday following a reported rise in U.S. crude inventories and an estimate that OPEC may have produced more crude in November than previously thought, potentially undermining a planned output cut.
International Brent crude futures were down 58 cents at $55.14 per barrel at 1054 GMT.
U.S. West Texas Intermediate (WTI) crude oil futures were down 61 cents at $52.37 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.
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.
Greg McKenna, chief market strategist at foreign exchange and futures brokerage AxiTrader, said “traders pretty much have a Fed increase of 25 basis points locked and loaded”.
Oil traders said prices were further depressed by a report from the International Energy Agency (IEA) which said it believes OPEC pumped about 34.2 million barrels per day (bpd) of crude in November, more than 500,000 bpd above OPEC’s official estimate for October. [IEA/M]
If true, that would undermine efforts by the Organization of the Petroleum Exporting Countries and other producers such as Russia to cut almost 1.8 million bpd of production in an effort to end two years of oversupply and cheap oil. OPEC’s own November production figures will be released later on Wednesday.
The IEA 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.
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.