Oil prices came under pressure after the US Energy Information Administration (EIA) said crude inventories rose for a third consecutive week.
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OPEC upgraded on Wednesday its 2016 projections for world oil demand growth to 1.22 million barrels a day (mb/d), up by 30,000 b/d from its previous estimate, but warned that there were “lingering concerns” that refiners in the USA and Europe may cut processing rates, which could decrease the demand for crude.
On Wednesday, US benchmark West Texas Intermediate fell 2.48 per cent to $41.71 while worldwide benchmark Brent Crude fell 2.49 per cent to $43.86 a barrel.
Saudi Arabia usually ramps up crude production during the summer to meet peak domestic demand for electricity for cooling goal. Total OPEC production was up 46,000 barrels per day to 33.11 million barrels.
Oil prices rose as much as 1 percent on Wednesday in anticipation the U.S. government would report a weekly drop in crude and gasoline stockpiles, tempering glut worries heightened by Saudi Arabia’s record high oil output.
Since 2014, Saudi Arabia has resisted pressure from other producers to cut production, betting that the low oil prices will force other exporters, such as the United States, to cut their output.
The agency now expects USA oil output to fall by 700,000 barrels per day (bpd) this year to 8.73 million bpd, compared with the 820,000-bpd drop it previously forecast.
The re-balancing of world markets will resume towards the end of the year, according to OPEC.
“Renewed attempts at verbal intervention by Opec will help bolster oil market sentiment, although the group will struggle to rebuild its role as a backstop to Brent”, oil analysts at BMI Research said in a note to clients.
“The economies of major oil consuming countries are expected to improve which in turn would augment oil demand in the coming quarters, especially in preparation for the approaching winter season in the Northern Hemisphere”, OPEC President Mohammed Bin Saleh Al-Sada said.
The actions of some of the group’s biggest producers, however, were distinctly bearish.
A similar effort to freeze output in April collapsed after Saudi Arabia demanded that Iran be part of the deal.
Traders said markets were being weighed down by an ongoing supply overhang in crude and refined fuel products, and that a suggested meeting by oil producers was unlikely to result in significant market tightening.
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Crude oil futures fell by Rs 30 to Rs 2,782 per barrel today as speculators trimmed their position amid a weak trend in the Asian markets.
