Oil prices fell on Thursday after a sharp rise in U.S. crude inventories deepened concerns about a global supply glut, though talk of possible OPEC action helped limit the decline.
Brent crude dropped 67 cents to $62.82 a barrel by 0904 GMT after earlier losing as much as $1. U.S. West Texas Intermediate fell more than $1 before recovering slightly to trade 79 cents lower at $53.84.
The U.S. Energy Information Administration said commercial crude inventories rose by 4.9 million barrels to 446.91 million barrels last week, the highest level since December. U.S. output also held at a record 11.7 million barrels per day.
Market sentiment remained weak, with analysts pointing to a bearish trend and uncertainty over what OPEC would decide when it meets in December. Tamas Varga of PVM brokerage said the market trend was “still bearish” and asked, “The question is what OPEC will do in December, will they cut, and if so, by how much?”
OPEC has been worried about a possible glut that could push prices lower, while Saudi Arabia, its biggest exporter, is also under pressure from the United States to avoid another spike in prices. U.S. President Donald Trump wrote on Twitter on Wednesday: “Oil prices getting lower. Great! Like a big Tax Cut for America and the World. Enjoy!... Thank you to Saudi Arabia, but let’s go lower!”
Weak Asian markets added to the pressure as investors worried about slowing global growth, higher U.S. interest rates and trade tensions. Trading was expected to stay muted until Monday because of the Thanksgiving holiday in the United States.
More crude could also reach the market as pipeline bottlenecks in the United States ease in the second half of 2019. Output growth has outpaced transport capacity, leaving additional supply constrained by infrastructure.
OPEC is considering a production cut when it meets on Dec. 6, but Iran is expected to resist any voluntary reduction. Russia, which is aligned with OPEC, has also given no indication that it would join a cut.
William O’Loughlin, an investment analyst at Australia’s Rivkin Securities, said the risk was that the group might not reach agreement. “While there is talk that OPEC plus Russia may again agree to a production cut, the concern is that not all relevant parties will be able to come to an agreement,” he said.
