Oil drops as market tracks US supplies

25/08/2016 04:58 AST

Oil prices fell Wednesday, with Brent stuck below $50, after data showed an increase in US crude stockpiles, adding to supply glut concerns.

Data from the American Petroleum Institute (API) Tuesday showed US crude inventories rose by 4.5 million barrels last week.

Rising stocks indicate weaker demand in the world’s top oil consuming nation and add to worries about a global crude supply glut.

A similar decline when the US energy department releases official data on commercial crude inventories on Wednesday could see WTI “pull back to the $45 handle,” said IG Markets analyst Angus Nicholson.

Around 1115 GMT, US benchmark West Texas Intermediate (WTI) for delivery in October was down 84 cents at $47.26 a barrel.

Brent North Sea crude for October delivery dropped 51 cents to $49.45 a barrel compared with the close on Tuesday.

Oil prices had jumped Tuesday on a report that Iran could support an effort by OPEC and Russia to freeze production and firm prices.

Members of the Organization of Petroleum Exporting Countries led by Saudi Arabia and major non-cartel producer Russia are meeting next month on the sidelines of an energy conference in Algeria, where they are expected to discuss ways to stabilize the oversupplied crude market.

Iran has reportedly indicated it will attend the meeting but analyst Nicholson said that “attendance does not mean they are ready to commit to a deal.”

“And when Iraq and Saudi Arabia are producing at record levels, it is difficult to see Iran being happy to produce well below their potential,” he added.

Arab News