Oil prices drop on rising US crude inventories and production

Big 5
Oil markets dipped on Thursday, weighed down by rising U.S. crude inventories and production as well as a stronger dollar, which potentially hampers fuel consumption in countries that use other currencies at home.

Brent crude futures, the international benchmark for oil prices,were at $56.13 a barrel at 0134 GMT, down 16 cents, or 0.3 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $50.68 per barrel, down 1 cent from the last settlement.

Traders said that a strengthening dollar had weighed on Brent while rising crude stocks and production in the United States had weighed on WTI.

U.S. commercial crude oil inventories rose for a third straight week, building by 4.6 million barrels in the week ending Sept. 15, to 472.83 million barrels. Meanwhile, U.S. oil production has largely recovered from the shut-downs following Hurricane Harvey, currently standing at 9.51 million barrels per day (bpd), up from 8.78 million bpd directly after the storm hit the U.S. Gulf Coast.

But demand for American crude oil could pick up soon, should producer club OPEC extend a production cut aimed at tightening supplies and propping up prices.

The Organization of the Petroleum Exporting Countries (OPEC) is due to meet in Vienna on Friday to discuss extending a production cut deal with non-OPEC oil producers that has been in place since January and in its current form is due to expire at the end of March 2018.

OPEC and some non-OPEC members pledged to cut production by around 1.8 million bpd from January in order to tighten the market and prop up prices.

But due to the exemption of OPEC members Libya and Nigeria from cutting and a lack of compliance by others, oil markets remain amply supplied, triggering calls for stricter or extended cuts.

“Exempt members Libya and Nigeria may be bought into the fold of the production cut deal. There also remains the possibility that an extension of the agreement or an increase in the cutsmay be announced,” said Jeffrey Halley, senior market analyst at futures brokerage OANDA.

Source: Reuters