SINGAPORE: Oil prices dipped on Wednesday, as refined product inventories in the United States rose in what the market interpreted as a sign of lackluster demand.
Brent crude futures LCOc1, the international benchmark for oil prices, were down 24 cents, or 0.4 percent, at $62.62 a barrel.
Traders said the lower prices came after a report by the American Petroleum Institute (AI) late on Tuesday that showed a 9.2 million barrel rise in gasoline stocks in the week to Dec. 1, and an increase of 4.3 million barrels in inventories of distillates, which include diesel and heating oil.
The perception that the higher fuel stocks pointed to weak demand outweighed the fact that crude inventories fell by 5.5 million barrels, to 451.8 million, traders said.
Outside the United States, analysts said that a supply cut led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia, which is expected to last throughout 2018, has helped Brent prices rise by over 40 percent since June, and by more than 130 percent since January 2016, when they hit their lowest level since 2003.
With the supply cuts likely in place throughout 2018, analysts said crude prices were well supported.
“Robust global demand and tight supplies should see Brent crude oil rise to $70 per barrel by mid-year (2018),” said Bank of America Merrill Lynch in its 2018 outlook.
One factor that could undermine OPEC’s and Russia’s effort to cut supplies and prop up prices is U.S. oil production C-OUT-T-EIA, which has risen by 15 percent since mid-2016 to 9.68 million barrels per day, close to levels of top producers Russia and Saudi Arabia.
“U.S. shale producers continue to win market share,” said Fawad Razaqzada, analyst at futures brokerage Forex.com. —Reuters