Oil prices fell on Wednesday, following rising nearly 4 percent the previous day, due to easing fears that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, in the OPEC+ grouping, will soon cut production.
Global benchmark Brent crude futures fell 40 cents, or 0.4 percent, to $99.82 a barrel by 0337 GMT, following rising 3.9 percent on Tuesday. US West Texas Intermediate crude futures also fell 27 cents, or 0.29 percent, at $93.47 a barrel, following jumping 3.7 percent the previous day.
Both contracts rose on Tuesday following indicated Saudi Arabiathe de facto leader of OPEC, to the possibility of conducting OPEC+ Production cuts to balance the market.
But nine OPEC sources told Archyde.com on Tuesday that potential OPEC+ production cuts may not be imminent, and are likely to coincide with the return of the Iran to the oil markets if it reaches a nuclear agreement with the West.
A senior US official told Archyde.com on Monday that Iran had given up some of its key demands to revive the deal.
“Tuesday’s rise was exaggerated, as many investors knew that it would take several months for Iranian oil to flow into the international market even if an agreement was reached to revive the 2015 Tehran nuclear deal, which means that OPEC+ is in the process of being overwhelmed,” said Kazuhiko Saito, chief analyst at Fujituni Securities. You’re not going to cut production that fast.”
“However, there is not much room for decline in the market due to the strong demand for heating fuel for the winter season,” he added.
Gas prices in the United States jumped above $10 for the first time in nearly 14 years due to higher prices in Europe, where supplies remain tight.
Underlining the supply shortfall, US crude stocks fell by regarding 5.6 million barrels in the week ending August 19, according to market sources, citing American Petroleum Institute figures on Tuesday, versus analysts’ estimates of a 900,000-barrel drop in a Archyde.com poll.
But gasoline stocks rose by 268,000 barrels, while distillate stocks rose by 1.1 million barrels.
Oil rose in 2022, approaching an all-time high of $147 in March following the Russian invasion of Ukraine, raising supply concerns.
Since then, fears of a global recession, rising inflation and weak demand have weighed on prices.
