Oil prices have declined due to rising US crude inventories and following reports of a private agreement reached last month by Russia and Saudi Arabia to increase crude production.
Brent crude oil futures decreased 15 cents, or 0.2%, to $86.14 per barrel, while US West Texas Intermediate (WTI) crude futures fell 18 cents, or 0.2%, to stand at $76.23, Reuters reported.
The fall in prices comes after Brent hit a four-year high of $86.74 per barrel on 03 October.
Futures brokerage Oanda Asia-Pacific trading head Stephen Innes was quoted by the news agency as saying: “Data for last week showed a much more significant than expected…build in US commercial crude (inventories), which generally suggests that oil prices should tumble.”
For the week ending 28 September, US crude oil stocks increased by around eight million barrels to reach 404 million barrels, according to Energy Information Administration (EIA). This represents the biggest rise since March last year.
US crude oil production stands at a record high of 11.1 million barrels per day (bpd).
In a bid to bring the rising prices under control, Russia and Saudi Arabia secretly agreed to raise oil production before consulting with other members of the Organization of the Petroleum Exporting Countries (OPEC), Reuters stated.
The deal comes as the markets remain tensed ahead of the imminent sanctions targeting Iran’s oil sector. The sanctions are expected to remove around 1.5 million bpd of supply.
On the demand side, high oil prices coupled with weakening emerging market currencies is anticipated to impact fuel demand and economic growth.
Energy consultancy JBC Energy told Reuters: “We have been taking a very close look at the demand signals in the market, and what we have been seeing is not good.”
The consultancy has projected a reduction in oil demand.