Oil prices resumed their downward trend on Wednesday as data showed a rise in U.S. crude inventories and record supplies in the rest of the world cast doubt on OPEC’s ability to cut supplies and tighten the market.
U.S. West Texas Intermediate (WTI) crude oil futures were trading down 13 cents, or 0.3%, at $49.43 per barrel at 0416 GMT, after gaining 0.7% in the previous session. WTI has fallen for seven of the past eight sessions.
Traders said that a report late on Tuesday by the American Petroleum Institute (API) that U.S. crude oil inventories rose by 897,000 barrels in the week to April 21 to 532.5 million barrels had weighed on WTI.
Brent crude futures, the international benchmark for oil prices, were at $51.99 per barrel, down 11 cents, or 0.2%, from their last close. Brent is around 8.5% below its April peak.
The Organization of the Petroleum Exporting Countries (OPEC) and a group other producers including Russia, but excluding the United States, have pledged to cut output by 1.8 million barrels per day (bpd) during the first half of the year in order to rein in years of oversupply and prop up prices.
Yet prices have largely slumped this year as U.S. inventories remained brimming and global fuel supplies set new records, despite the pledges to cut output.
The average value of the Brent crude oil forward curve has fallen by more than $5 per barrel since the start of the year, when an OPEC-led supply cut officially started, implying that traders have doubts about the effect of the cutbacks on supplies.
The slump in Brent is a result of record crude oil volumes in circulation on ships around the world, despite the cuts.
Shipping data in Thomson Reuters Eikon shows that 50 million bpd have been booked for shipment on tankers this month, up more than 10% since December last year.
That’s contributed to rising inventories, not just in the United States but also in key Asian markets like Japan.
Despite the price declines and bulging supplies, some analysts said there were signs of a tightening market.
“Supply of crude is likely to decline over next three weeks, which will support the market and create the conditions for a rebound in prices,” said Georgi Slavov of commodities brokerage Marex Spectron, adding that demand was also slowly picking up into May.