MELBOURNE: Oil prices were down in early trade on Wednesday, extending several days of losses, amid uncertainty over how much supply producing countries will push to restore to the market at a meeting this week while the coronavirus pandemic persists.
U.S. West Texas Intermediate (WTI) crude futures fell 18 cents, or 0.3%, to $ 59.57 a barrel by 0122 GMT, down 6% since Feb. 25, when they hit their highest close since May 2019.
Brent crude futures dipped 7 cents, or 0.1%, to $ 62.63 a barrel, down 7% from a 13-month high hit last week.
The Organization of the Petroleum Exporting Countries (OPEC) and allies, together called OPEC+, are set to meet on Thursday, at a time when they are generally positive on the oil market outlook compared with a year ago when they slashed supply to boost prices.
OPEC+ sources last week said an output increase of 500,000 barrels per day (bpd) looked possible without building inventories. Saudi Arabia’s voluntary cut of 1 million bpd is due to end in April, but it is unclear whether it will restore all of that supply right away.
“The days of GDP and oil demand figures being in the red because of the pandemic-induced shock appear to be behind us,” OPEC Secretary General Mohammad Barkindo said on Tuesday, speaking ahead of a meeting of OPEC+’s Joint Technical Committee (JTC).
However, a JTC document seen by Reuters cited continued uncertainties in physical markets and risks of the coronavirus pandemic persisting with COVID-19 mutations.
“The question the group must answer this week is whether the rebound in demand is strong enough to sustain an increase in output,” ANZ analysts said in a note.
Reinforcing concerns of potential oversupply, the American Petroleum Institute industry group reported U.S. crude stocks rose by 7.4 million barrels in the week to Feb. 26, in stark contrast to analysts’ estimates for a draw of 928,000 barrels.
“The unexpectedly large crude inventories build hit at a worrying time for oil bulls,” said Stephen Innes, global market strategist at Axi.