Oil prices eased on Wednesday after government data showed crude stockpiles in the United States rose unexpectedly last week, prompting investor concerns of excess supplies.
Brent crude futures lost 54 cents or 0.81 per cent to sell for $66.09 per barrel and the US West Texas Intermediate (WTI) crude futures slipped by 52 cents or 0.82 per cent to $63.15 a barrel.
According to new data from the US Energy Information Administration released on Wednesday, US crude oil inventories saw an increase of 4 million barrels to 441.8 million barrels during the week ending May 9.
Crude oil prices were trading down before the crude data release by the US Energy Information Administration. On Tuesday, the American Petroleum Institute (API) reported a surprise build in US crude oil inventories of 4.287 million barrels in U.S. crude oil inventories with draws in gasoline and distillate stocks.
More worries came as the Organisation of the Petroleum Exporting Countries and allied producers (OPEC+) have started increasing supply to the market.
However, in the last month, combined crude oil production from the 22-member group dropped by 106,000 barrels per day in April compared to March, despite the pledge of the eight OPEC+ producers who are withholding supply to begin easing their cuts.
OPEC+ producers Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria, and Oman decided to begin raising production in April, for the first time since 2022.
The figures in OPEC’s Monthly Oil Market Report (MOMR) published today suggest that the eight OPEC+ producers added fewer than 30,000 barrels per day to their collective supply in April, versus plans to add 138,000 barrels per day.
Saudi Arabia, OPEC’s top producer and leader of the OPEC+ pact, raised its production by 49,000 barrels per day compared to March and pumped 9 million barrels per day in April, according to OPEC’s secondary sources.
Declines in the sanctioned Iran and Venezuela, as well as in Nigeria, which frequently faces force majeure circumstances, offset the Saudi hike.
Total OPEC production (excluding allies) dropped by 62,000 barrels per day in April compared to March.
OPEC trimmed its forecast for growth in oil supply from the US and other producers outside the wider OPEC+ group this year.
It said output will rise by about 800,000 barrels per day in 2025, OPEC said in a monthly report, down from last month’s forecast of 900,000 barrels per day.
Also, a stronger the US Dollar weighed on prices on Wednesday. A stronger greenback makes oil traded in the American currency more expensive for investors holding other currencies, hurting demand.