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Oil drop Wednesday on potential output hikes

Oil drop Wednesday on potential output hikes

Mubasher: Oil prices went down on early Wednesday affected by hiking US supply and expectations that the members of Organization of Petroleum Exporting Countries (OPEC)) would voluntarily relax production cuts.

US Nymex futures shed 0.6% to $65.99 per barrel (pb) from their last traded price, while global benchmark Brent crudes fell 0.3% to $75.65 pb from their last session.

The fall in crude prices precedes the US Energy Information Administration (EIA) data pertaining the US crude inventories due later in the day.

The American Petroleum Institute (API) said on Tuesday Crude inventories in the US saw a rise of 830,000 barrels in the week ended 8 June to 433.7 million, while OPEC announced in the same day that the oil market outlook is uncertain, warning of potential downsides to demand.

“The prospect of easing supply curbs from OPEC-led producers continues to be reflected in oil’s overall depressed price action,” futures brokerage FXTM analyst Lukman Otunuga told Thomson Reuters.

In addition, oil supply from Russia rose again above 11 million barrel per day (bpd) in June, with Saudi production jumping again over 10 million bpd.  

Meanwhile, the organisation is set to meet on 22 June in Vienna to discuss future production policy.

By 6:53 am GMT, Nymex future crudes fell 0.72% to $65.88 pb, while Brent crudes went down 0.65% to $75.39 pb.