Oil prices have dropped following reports of an increase in US crude inventories despite the OPEC-led efforts to rebalance the market.
Brent crude futures slipped 36 cents to $56.58 a barrel, while the US West Texas Intermediate (WTI) crude futures were down by 32 cents to $50.98 reported Reuters.
Industry group the American Petroleum Institute (API) stated that crude inventories in the US soared by 3.1 million barrels last week to touch 468.5 million barrels.
OPEC with other key oil-producing nations pledged to reduce production by 1.8 million barrels from the beginning of this year.
The initiative helped the falling oil prices but the market still remains oversupplied due to a persistent increase in the US production.
OPEC is expected to extend the oil-curb deal which is scheduled to end on 31 March next year.
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RCMA Group Energy managing director David Maher said: “OPEC doesn’t really have a choice but to extend cuts unless they’re happy to risk sub-$40 per barrel prices again.”
Maher further added that the market is likely to remain balanced in the next year and 2019 with Brent crude set to remain within the $50 to $60 per barrel range.
Oil supplies may be affected by rising economic and political crisis in Venezuela, a key OPEC member with significant oil reserves.
US President Donald Trump’s threats to impose new sanctions on Iran, another key oil producer and OPEC member, may also impact the crude market.