Oil prices fell on Wednesday as bullish output forecasts by two big U.S. producers and a build in weekly U.S. crude stockpiles outweighed OPEC-led production cuts.
International Brent crude futures were at $65.47 per barrel at 0745 GMT, down 39 cents, or 0.6 percent, from their last settlement. Brent had dropped to as low as $65.22 earlier in the session on Wednesday.
U.S. West Texas Intermediate (WTI) crude oil futures were down 0.7 percent, or 41 cents, at $56.15 per barrel.
“Crude oil futures continue to demonstrate whippy trades as markets balance between OPEC-led cuts and the effects of rising U.S. production levels,” said Benjamin Lu, commodities analyst at Singapore-based brokerage firm Phillip Futures.
Increasingly event-driven trading was adding to market volatility, he said.
Chevron Corp and Exxon Mobil Corp released rival Permian Basin projections on Tuesday pointing to increased shale oil production.
If realized, the increases would cement the pair as the dominant players in the West Texas and New Mexico field, with one-third of Permian production potentially under their control within five years.
Data from the American Petroleum Institute (API), an industry group, also showed larger-than-expected gains in U.S. crude stockpiles.
U.S. crude inventories rose by 7.3 million barrels in the week ending March 1 to 451.5 million, compared with analysts’ expectations for an increase of 1.2 million barrels, API said. Crude stocks at the Cushing, Oklahoma, delivery hub rose by 1.1 million barrels. [API/S]
“An increase in U.S. crude inventories is weighing on oil prices and in the long term, concerns over rising oil production in the Permian region is keeping a lid on prices,” said Kim Kwang-rae, commodity analyst at Samsung Futures in Seoul.
Official data from the U.S. Department of Energy’s Energy Information Administration is due later on Wednesday.
The rise in North American production undermines the ongoing supply cut efforts led by the Organization of Petroleum Exporting Countries (OPEC).
OPEC and its allies pledged to curb output by 1.2 million barrels per day, and they are likely to push back their decision whether or not to extend the output cut agreement to June from April, according to sources.
U.S. Secretary of State Mike Pompeo said President Donald Trump would reject any trade deal that is not perfect, but added the White House would keep working on an agreement.