Brent crude oil price slides on abundant US output, but supply cuts limit decline
Oil markets edged lower on Thursday as US inventories remained strong, but OPEC led supply cuts helped limit the slide.
Oil prices fell on Thursday morning even with US stockpiles seeing a slight reduction, with OPEC-led production cuts helping to stop the commodity from sliding too far.
Brent crude futures sat at $71.43 a barrel at 7:00am GMT, down 19 cents, representing a 0.3% decline and falling away from Wednesday’s five-month high of $72.27 a barrel.
Meanwhile, US West Texas Intermediate (WTI) futures also fell, sliding 0.2% to hit $63.62 a barrel.
Brent oil today: price chart
US crude inventories fall
The slide in oil price is surprising, considering that US crude inventories declined by 1.4 million barrels in the week to April 12, according to data released by the US Department of Energy on Wednesday. Analysts initially were expecting a 1.7 million barrel increase.
“The unexpected drawdown in U.S. commercial crude oil stocks was balanced by lower-than-expected withdrawals in the country’s gasoline and distillate inventories,” Abhishek Kumar, head of analytics at Interfax Energy in London told Reuters.
OPEC-led supply cuts limit oils price from sliding further
Despite the decline in oil prices, the commodity has continued to find support this year from OPEC-led supply cuts that were agree in 2018 and came into effect in January, with exporters agreeing to limit their output by 1.2 million barrels a day.
Global supply has been further reigned in by US-led sanctions on key oil producers like Venezuela and Iran.
However, growing US output and the ongoing uncertainty created by the US-China trade war is stopping oil prices from surging higher.
‘A persistent rise in U.S. oil output, together with lingering demand-side concerns emerging from the U.S.-China trade dispute, is limiting price gains,’ Kumar added.
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.
Be ready to act on ECB opportunities
Learn how the ECB’s monetary policy announcements affect interest rates and price stability ahead of its next meeting in 30 January 2025.
- How might the next meeting affect the markets?
- What are the key rate decisions to watch?
- Why is the Governing Council announcement important for traders?
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
