NEW YORK: Oil prices fell roughly one per cent on Wednesday but remained close to 2016 highs as traders weighed a jump in US crude inventories and a fall in US production.
US benchmark West Texas Intermediate (WTI) for delivery in May finished 41 cents lower at US$41.76 a barrel on the New York Mercantile Exchange.
In London, Brent North Sea crude for June delivery, the international benchmark for crude oil, fell to US$44.18 a barrel, down 51 cents from Tuesday.
The market reacted only slightly to the US Department of Energy s latest weekly petroleum report, which showed commercial crude stockpiles jumped by 6.6 million barrels last week, more than six times as much as analysts expected.
A week ago, WTI prices had climbed sharply following a smaller decline in the stockpiles.
Market watchers said the resilience in prices came from a fall in US gasoline supplies and a fall in US oil production to below nine million barrels per day for the first time since October 2014.
“The sharp drawdown of gasoline stocks kind of offset the headline increase (in crude), but ahead of the Russia-OPEC meeting I would expect to see some profit-taking,” said Fawad Razaqzada, analyst at City Index trading group.
“Prices should drop far more than this!” said James Williams of WTRG Economics. “The crude oil market is not trading on fundamentals.”
On Tuesday, prices shot to 2016 highs as reports that Saudi Arabia and Russia had reached a consensus on freezing output that boosted expectations of a wider deal a meeting between OPEC and non-OPEC oil producers in Doha on Sunday.
But the Organisation of the Petroleum Exporting Countries on Wednesday warned that the world remains awash with crude.
“Positive market sentiments continue to arise from the output freeze plan being considered by major crude exporters,” as well as an expected fall in output in the United States and elsewhere, OPEC said. “Nevertheless, hurdles prevail as oversupply persists and inventories remain high,” the cartel cautioned.