Prices pared gains in post-settlement trade as the American Petroleum Institute said crude inventories rose by 8.8 million barrels in the week to November 9 to 440.7 million, compared with analysts' expectations for an increase of 3.2 million barrels. OPEC and its partners, meanwhile, are said to be considering a bigger-than-anticipated cut in production.
Together with Russian Federation and other non-OPEC producers, OPEC had agreed in June to boost supply after pressure from U.S. President Donald Trump to lower prices, partially unwinding output cuts that began in January 2017. But that rally was kicked over by President Trump's tweet. America's increasing inventories suggests "the nation's crude exports could become more active, resulting in excess global supplies".
The comments from the minister, Khalid al-Falih, show the balancing act the US allies face in dealing with President Donald Trump's actions related to the oil industry. Total volume traded Tuesday was about 90 per cent above the 100-day average. The contract fell 26 cents to $59.93 on Monday, the lowest close since February 13.
Brent crude fell by 4.2 per cent to $67.15, touching its lowest since March. The global benchmark crude traded at a US$9.63 premium to WTI for the same month.
OPEC built a case on Tuesday for cutting oil output when it meets next month, warning that a supply glut could emerge in 2019 as the world economy slows and rivals increase production more quickly than expected.
At the same time, supply has been surging, especially due to a 22 percent rise in U.S. crude oil production this year to a record 11.6 million barrels per day (bpd).
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"The market has cratered over the last few weeks and the pop today is related to the chatter that producers could cut up to 1.4 million bpd in 2019", said Gene McGillian, vice president of market research for Tradition Energy in Stamford, Connecticut.
Most analysts expect U.S. output to climb above 12 million bpd within the first half of 2019.
In the U.S., if the stockpile gain reported by the American Petroleum Institute is confirmed by Energy Information Administration data, that will mark the eighth straight week of increases.
Once the oil industry's star product, gasoline is now losing oil refineries money in Europe and has plunged in value against diesel, its main competitor.
Raises non-OPEC oil output growth forecast to 2.4 mln bpd in 2018 and 1.9 mln bpd 2019, from the previous estimate of 2.2 mln bpd and 1.8 mln bpd, respectively.
Official storage data is due on Wednesday from the Energy Information Administration, with analysts expecting a 3 million barrel rise in commercial crude inventories.