Oil prices were down on Wednesday on concerns about the market’s recovery after OPEC and its allies lowered their 2021 demand growth forecast, but a draw in U.S. crude inventories limited the fall.
Brent crude for May, which expires on Wednesday, shed 41 cents, or 0.6 per cent, to $63.73 a barrel at 1:45 p.m. EDT (1745 GMT). The more active Brent contract for June was down $1.10, or 1.75 per cent, at $63.07 a barrel.
U.S. West Texas Intermediate (WTI) crude futures lost 47 cents, or 0.8 per cent, to $60.08 a barrel.
U.S. crude stocks fell unexpectedly last week as refinery runs increased, shrinking by 876,000 barrels in the last week, compared with analysts’ expectations for an increase of 107,000 barrels, the Energy Information Administration said.
The surprise draw in crude briefly supported prices, but a downward revision of OPEC+ oil demand growth forecast for this year by 300,000 barrels per day (bpd) kept oil from moving higher.
“All eyes are on OPEC - how much of an accommodation are they going to give Russia and how much the Saudis are going to shoulder,” said John Kilduff, partner at Again Capital in New York.
The Organization of the Petroleum Exporting Countries and allies, together called OPEC+, are set to meet on Thursday, to decide on output policy.
“Given this pessimistic outlook, it seems likely that the production quotas will be left in place for another month,” said Commerzbank analyst Eugen Weinberg.
OPEC+ are currently curbing output by just over 7 million bpd in a bid to support prices and reduce oversupply. Saudi Arabia has added to those cuts with an additional 1 million bpd.
“The oil market is still playing a guessing game today as to what supply policy OPEC+ will set out at tomorrow’s meeting, but the $64 per barrel Brent price signals that traders expect a cautious approach from the alliance,” said Rystad Energy’s analyst Louise Dickson.
Kuwait’s Oil Minister Oil Mohammad Abdulatif al-Fares expressed “cautious optimism” on Wednesday that global oil demand will improve as COVID-19 vaccination programs gather pace and industrial output recovers.
OPEC oil output rose in March as higher supply from Iran countered reductions by other members under a pact with allies, a Reuters survey found, a headwind for its supply-limiting efforts if Tehran’s boost is sustained.
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