Oil prices fell on Wednesday on worries that global supply is climbing after U.S. inventories rose unexpectedly and Saudi Arabia and other big producers signalled that they may increase output.
U.S. crude inventories rose 2.1 million barrels in the week to June 1, the Energy Information Administration said, a surprise after analysts had forecast a decrease of 1.8 million barrels. Fuel inventories also rose.
U.S. crude output hit a record of 10.8 million barrels a day in the week, according to the EIA’s weekly report. Rising production has prompted selling since global benchmark Brent climbed above $80 a barrel last month.
U.S. light crude settled down 79 cents, or 1.2 percent, at $64.73 a barrel. Brent pared losses late in the session, settling down 2 cents at $75.26 a barrel. In post-settlement trade, Brent turned positive, rising 18 cents a barrel.
As U.S. crude dropped more quickly than Brent, the spread between the two widened by 6.5 percent from the previous session to as much as $10.74 a barrel. .
India’s oil minister said his Saudi counterpart told him the kingdom was revisiting its policy of cutting production, which has supported prices.
The U.S. government has unofficially asked Saudi Arabia and other OPEC producers to boost output, sources told Reuters on Tuesday.
OPEC and Russia will meet on June 22/23 to decide whether to increase production. The producers have been considering a supply increase of up to 1 million barrels per day, sources told Reuters.
Balancing those expectations has been falling production in Venezuela, which has the world’s biggest oil reserves and is a key supplier to American fuel markets. Its output has been hampered by inadequate investment, mismanagement and U.S. sanctions.
Three sources have told Reuters Venezuelan state firm PDVSA is considering declaring force majeure on some exports.
U.S. sanctions on Iran also threaten to reduce oil exports from that OPEC producer.
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