Oil prices fell more than 2 percent on Wednesday, ending their longest bull-run in more than five years, as climbing OPEC exports and a stronger dollar turned sentiment more bearish.
Benchmark Brent crude futures were down $1.14, or 1.3 percent, at $48.47 a barrel by 1402 GMT. Prices had climbed for eight straight sessions to Monday.
US WTI crude futures were down $1.35, or 2.8 percent, at $45.72 a barrel.
“The air is getting thin for oil prices. The price increase just ran out of steam, which is not very surprising, given the newsflow of rising OPEC supplies,” said Carsten Fritsch, senior commodity analyst at Commerzbank.
Another analyst said the strong dollar provided less incentive to invest in greenback-denominated commodities such as crude oil.
Rising OPEC exports
Oil exports by the Organization of the Petroleum Exporting Countries climbed for a second month in June, Thomson Reuters Oil Research data showed.
OPEC exported 25.92 million barrels per day (bpd) in June, up 450,000 bpd from May and 1.9 million bpd more than a year earlier.
The rise in exports comes despite OPEC’s vow to rein in production until March 2018 and follows hot on the heels of Reuters’ monthly OPEC production survey which found output jumped to a 2017 high last month as OPEC members Nigeria and Libya continued to pump more.
Nigeria and Libya are both exempt from the output pact.
The head of the International Energy Agency told Reuters that rising output from key oil producers could hamper expectations that the oil market would rebalance in the second half of the year.
The bearish outlook also led Saxo Bank to cut its year-end Brent crude price forecast to $53 a barrel from $58.
“OPEC’s ability to maintain exports should be tempered by the need to keep more oil at home to meet increased domestic demand during the peak summer months,” said Ole Hansen, head of commodity strategy at Saxo Bank.
US crude inventory data
Traders were also eyeing weekly US crude inventory data, delayed by a day due to the US public holiday on Tuesday.
A Reuters poll showed analysts expected weekly crude stocks to have fallen by 2.8 million barrels. The weekly data showed a surprise rise in inventories last week.
Underlining an expected shift in longer term oil demand, car group Volvo said on Wednesday that from 2019 all of its new models would be fully electric or hybrid vehicles.