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.
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