Oil drops over doubts on producers’ commitment to supply cuts
Oil prices fell on Thursday after U.S. distillate inventories rose, creating doubt on major oil producers’ commitment to further output cuts.
Brent crude futures lost 1.46%, or 58 cents, at $39.21 per barrel. U.S. West Texas Intermediate dropped 1.98%, or 74 cents, at $36.55 per barrel.
OPEC+ members Saudi Arabia and Russia planned to support the extension of the record 9.7-million-bpd supply cut beyond June. However, the oil producers’ organization failed to meet and assess the need for additional cuts on Thursday.
That could mean that OPEC+ will stick with the 7.7-million-bpd production cut beyond June as earlier agreed.
Further, producers Saudi Arabia, Kuwait, and the U.A.E. do not plan to commit to the 1.18-million-bpd additional cut after June. This could indicate a rise in crude supply regardless of OPEC+’s decision.
The rapid build in U.S. distillate inventories also weighed on the oil prices. The Energy Information Administration reported that gasoline stocks grew by 2.8 million barrels, while distillate stocks increased by 9.9 million barrels.