Oil slipped further below $56 a barrel on Wednesday as an industry report showing a large rise in U.S. crude inventories signaled ample supply, even as OPEC achieves record compliance with its supply-cut accord.
U.S. inventories rose by a larger-than-expected 9.9 million barrels last week, the American Petroleum Institute (API) trade group said on Tuesday, ahead of the Energy Information Administration’s (EIA) official supply report.
“The inventory trend in the U.S. raises doubts about whether the OPEC production cuts have actually resulted already in a tighter supply situation,” said Carsten Fritsch, analyst at Commerzbank.
Brent crude LCOc1 was down 35 cents at $55.62 by 1328 GMT, half its level of mid-2014, when a global glut started a collapse in prices. U.S. crude CLc1 fell 36 cents to $52.84.
To support prices, the Organization of the Petroleum Exporting Countries and other producers including Russia are cutting output by almost 1.8 million barrels per day in the first half of 2017.
Although OPEC has made a strong start in complying with the cuts, rising U.S. stocks and a revival of U.S. oil output have limited the price rise.
Analysts expect U.S. crude inventories to have risen by 3.5 million barrels, the sixth straight week of gains, in the EIA report scheduled to be released at 1530 GMT. [EIA/S]