Oil prices fell on Wednesday on concerns about the market’s recovery after OPEC and its allies lowered their 2021 demand growth forecast, although strong Chinese factory activities lent some support.
Brent crude for May, which expires on Wednesday, fell 49 cents, or 0.76 percent, to $63.65 a barrel at 1322 GMT. The more active Brent contract for June was down 53 cents, or 0.83 percent, at $63.64 a barrel.
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US West Texas Intermediate (WTI) crude futures fell 45 cents, or 0.74 percent, to $60.10 a barrel.
OPEC+ has lowered its oil demand growth forecast for this year by 300,000 barrels per day (bpd), a report from its experts panel meeting seen by Reuters showed.
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 one 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.
Meanwhile, data from the American Petroleum Institute showed a bigger than expected build in US crude stocks.
Traders will be eying data later on Wednesday from the US Energy Information (EIA) for further guidance.
Oil prices found some support as China’s manufacturing activity expanded at the quickest pace in three months in March as factories cranked up production after a brief lull during the Lunar New Year holidays.
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- Oil prices slip as Suez opens, focus turns to output cuts at upcoming OPEC+ meet
- Norway to go ahead with offshore wind tenders to speed up oil industry transition
- UAE energy firm TAQA plans to expand its renewables portfolio in shift away from oil
- Iran oil exports remain ‘elevated’ in March, says a tanker tracker
- India, UAE discuss ways to strengthen energy cooperation: India’s oil minister
- Oil supercycle of sustained price surge unlikely due to ample stocks and supply: IEA