Oil prices extended losses in Asia Thursday following a rise in US commercial crude stockpiles, while traders turned cautious ahead of a crunch producers’ meeting.
A warning by the Organisation of the Petroleum Exporting Countries that the world remains oversupplied also dampened sentiment as key producer nations prepared to gather in Doha for Sunday’s talks on freezing output.
At around 0250 GMT, US benchmark West Texas Intermediate for delivery in May was down 47 cents, or 1.13 per cent, at $41.29 and Brent crude for June dropped 48 cents, or 1.09 per cent, to $43.70 a barrel.
Prices shot to 2016 highs Tuesday on the back of news that OPEC kingpin Saudi Arabia and non-OPEC producer Russia had reached a consensus to freeze output, stoking hopes of a wider deal in Doha.
“As a lot of optimism has been priced in ahead of the freeze meeting, traders shall remain cautious to the possible ‘sell on news’ next week,” said Margaret Yang, an analyst with CMC Markets in Singapore.
EY oil and gas analyst Sanjeev Gupta said the “bearish” US inventory data helped push down prices as it signals weaker demand in the world’s top oil consumer.
“In the meantime, China’s first-quarter economic data due Friday and results of the Doha meeting will set the tone for near-term price development,” Gupta said.
The US Energy Information Administration on Wednesday said US commercial crude stockpiles jumped 6.6 million barrels, or more than six times what analysts had expected.
OPEC, in its April report, trimmed its forecast for global oil demand growth this year and warned of possible further cuts. While expectations of an output freeze had helped prices, the group cautioned that “hurdles prevail as oversupply persists and inventories remain high”.
Prices slumped by about three quarters to below $30 between mid-2014 and February this year on the back of the global supply glut and overproduction.
