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© Reuters.
By Barani Krishnan
Investing.com - Worry that oil producing heavyweights Saudi Arabia and Russia were headed for a stalemate on production-cut talks sent crude prices lower on Wednesday, amid data showing U.S. output at a new record high.
West Texas Intermediate, the benchmark for U.S. crude prices, settled down 40 cents, or 0.8%, at $46.78 per barrel.
Brent, the London-traded global benchmark for crude, settled down 73 cents, or 1.4%, to $51.13
Crude prices began the day up on reports that oil producers gathered in Vienna under the OPEC+ alliance would agree to a total production cut of at least 1 million barrels per day from this quarter onward to mitigate some of the demand destruction to energy from the novel coronavirus outbreak. Adding to a prior deal in December, OPEC+ would be removing a total 3.1 million bpd, or 3.1% of global supply, from the market if those reports proved true.
Yet Bloomberg reported by midday that Russian Energy Minister Alexander Novak had left Vienna, ahead of Friday’s all-important meeting with the Saudis and the customary news conference that would announce the new deal. Bloomberg did not provide details but CNBC reported that while the Saudis had an appetite for higher oil prices, Moscow was “perfectly happy” with crude futures at between $50 and $60.
“Every oil trader has his finger on the buy or sell button watching this OPEC meeting,” said John Kilduff, founding partner at New York energy hedge fund Again Capital. “A deal to cut another 1 million bpd or more means a buy and a no-deal means sell. For now, everyone assumes it’s a sell.”
WTI and Brent futures rose as much 2% earlier in the day and remained up after the U.S. Energy Information Administration reported a positive inventory report for crude and fuel stockpiles in the country for a third week running.
The EIA said crude stockpiles rose by 785,000 barrels for the week ended Feb. 28, the EIA said. That compared with expectations for a build of 2.64 million barrels, according to forecasts compiled by Investing.com.
Gasoline stockpiles fell by 4.34 million barrels, versus forecasts for a decline of about 2.1 million barrels. Distillates inventories dropped by 4 million barrels, compared with expectations for a drawdown of 1.93 million barrels
While the stockpile numbers looked good, the EIA also took some of the shine off its inventory report by announcing that crude output in the world’s largest oil producer, the United States, was estimated to have reached a record high of 13.1 million barrels per day last week. The prior all-time high was 13 million bpd, achieved in December.
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