Oil prices have fallen following an increase in US crude stocks and an estimate that production from the Organization of the Petroleum Exporting Countries (OPEC) last month was more than previously thought.
International Brent crude futures fell 69 cents at $55.03 per barrel, while US West Texas Intermediate (WTI) crude oil futures also dropped 69 cents to $52.29 a barrel, Reuters reported.
Traders said that markets in the US also focused on an anticipated rise in interest rates, which are expected to support the dollar, making fuel imports that are dollar-traded more expensive for countries holding other currencies.
Reuters quoted Oanda Singapore senior market analyst Jeffrey Halley saying: "Momentum continues to wane in oil markets with both Brent and WTI slightly lower overnight, following higher than expected API inventory numbers in the United States… (which) showed an unexpectedly large increase of 4.7 million barrels."
Oil traders said prices fell further following a report from the International Energy Agency (IEA), which said it believes that OPEC produced about 34.2 million barrels a day of crude last month. This figure was 500,000bpd higher than its official estimate.
Should this be accurate, it would undermine the effort by OPEC and non-OPEC producers such as Russia to cut almost 1.8 million bpd of production to put an end the global oversupply.
IEA said that if OPEC sticks to its production target, assessed at 32.7 million bpd, and non-OPEC producers deliver the agreed cuts of 558,000bpd, then the market is expected to move into deficit in the first half of next year.
Image: The next few weeks will be crucial in determining if the production cuts are being implemented. Photo: courtesy of Jon Olav Elkenes, Flickr.