LONDON – Oil prices dropped on Thursday on doubts over the ability of crude producers to agree to extend record output cuts, heightened by worries over a build in U.S. fuel inventories.
Brent crude LCOc1 futures were down 41 cents at $39.38 a barrel at 1357 GMT, heading for their first fall in six sessions. U.S. West Texas Intermediate (WTI) crude CLc1 futures dropped 64 cents to $36.65.
Saudi Arabia and Russia, two of the world’s biggest oil producers, have agreed to support an extension into July of the 9.7 million barrels per day (bpd) supply cuts backed in April by the OPEC+ group, comprising the Organization of the Petroleum Exporting Countries and other major producers.
But holding an OPEC+ meeting to discuss the cuts remains conditional on a deepening of cuts by countries that have not complied with their targets so far, sources said.
Saudi Arabia, Kuwait and the United Arab Emirates are not planning to extend voluntary additional output cuts of 1.18 million bpd after June, indicating that crude supply could rise next month regardless of any OPEC+ decision.
SEB oil market analysts pointed to continuing weak demand keeping the Brent benchmark below $40 a barrel.
Official U.S. data showed gasoline stocks rose by 2.8 million barrels, nearly triple what analysts had expected. Distillate stocks rose by 9.9 million barrels, nearly four times more than expected.
In Asia, the volume of oil products traded during S&P Global Platts’ Market-on-Close process plunged 74% in May from a year earlier, data analysed by Reuters showed.
Striking a bullish note, however, Russia’s Energy Minister said the oil market in July could face a shortage of 3-5 million bpd, Interfax news agency reported.