Crude prices fell from session highs reached after Saudi Arabia’s OPEC Governor Adeeb Al-Aama statement that the kingdom expects crude exports to drop by roughly 100,000 bpd in August as it limits excess production.
Brent oil fell 32 cents, to settle at $72.58 per barrel, previously reaching a session high of $73.79. U.S. West Texas Intermediate (WTI) was 70 cents higher, or 1 percent, settling at $69.46. U.S. crude prices had reached a session high of $70.17 earlier in the session before paring gains.
Crude prices pulled back from highs earlier in the session as traders cashed in on profits, said John Kilduff, a partner at Again Capital Management in New York. Prices, which had strengthened on news of Saudi Arabia’s planned export cuts, fell as the market’s focus returned to potential oversupply as Saudi Arabia, Russia and other major producers continue to lift output.
OPEC and non-OPEC producers cut oil output in June by 20 percent more than agreed levels, compared to 47 percent in May, two sources familiar with the matter told Reuters on Wednesday.
“Just because the Saudis are trying to temper the fallout, doesn’t change the fact that they are increasing production,” Kilduff said.
Commodities, under pressure from a strong dollar and a new wave of trade tensions that stoked fears of damage to economies and commodities, also weighed on prices.
Earlier in the trading day, the U.S. dollar hit its highest level against a basket of other currencies since July 2017, up half a percent on the day.
“Refining margins in Asia are under pressure and some of the Chinese independent refiners have cut back on their processing, which is weighing on the Brent market,” said Andrew Lipow, president of Lipow Oil Associates in Houston.
News that a worker strike at Norwegian drilling rigs has ended also weighed on global oil prices.
Brent has fallen about 8 percent from last week’s high above $79 on emerging evidence of higher production from Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries, as well as Russia and the United States.
The U.S. Energy Information Administration said on Wednesday domestic crude production reached a record 11 million bpd last week. The U.S. has added nearly 1 million bpd in production since November, thanks to rapid increases in shale drilling.
A sharp jump in U.S. crude oil inventories also added to the bearish tone in the market. They rose 5.8 million barrels last week, compared to a forecast for a decline of 3.6 million barrels.
Despite the jump, inventories at the U.S. oil delivery hub for WTI in Cushing, Oklahoma were forecast to have fallen 1.8 million barrels, or 6.2 percent, through Tuesday, traders said, citing energy information provider Genscape.
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