Singapore — Oil prices inched down on Wednesday amid concern that Saudi Arabia and Russia will pump more crude in the second half of the year in response to falling global crude inventories and rising consumer prices.
Saudi Arabia and Russia have discussed raising Opec and non-Opec oil production by 1-million barrels a day to counter potential supply shortfalls from Venezuela and Iran.
Brent crude was down 45c or 0.6% at $74.94 a barrel at 3.25am GMT, after settling 9c higher on Tuesday.
US West Texas Intermediate crude was down 24c or 0.34% at $66.49 a barrel. It settled $1.15 lower on Tuesday.
“Opec has over-delivered on supply cuts in the past six months,” Harry Tchilinguirian, global head of commodity market strategy at French bank BNP Paribas, said in a note to clients. “There is … scope for an increase in Opec output.”
Opec-led supply curbs have largely cleared an inventory surplus in industrialised countries, and stocks continue to decline. The Organisation of the Petroleum Exporting Countries is due to meet in Vienna on June 22.
Credit Suisse analysts said on Tuesday that even if Russia and Opec producers raised output, they would probably add only 500,000 barrels a day, which would still leave inventories in the most developed countries short of the five-year average by the end of 2018.
Falling share prices and a stronger dollar index also weighed on oil prices.
US stock markets sank more than 1%, while the dollar wobbled at a 10-month high against the euro. A stronger dollar makes dollar-denominated commodities more expensive for holders of other currencies.
US oil drew some support on the expectation that US crude inventories fell last week — with a preliminary Reuters poll on Tuesday putting the drop at 1.8-million barrels.
Industry group American Petroleum Institute (API) releases its weekly oil data at 8.30pm GMT, followed by the report by US Energy Department’s Energy Information Administration on Thursday. Both are delayed by a day because of the federal Memorial Day holiday on Monday.