Oil prices fell on Wednesday after a rise in US crude inventories and ongoing high output from OPEC producers revived concerns of a fuel supply overhang.
Brent crude futures, the international benchmark for oil prices, were at $48.81 per barrel at 0259 GMT, down 3 cents from their last close. US West Texas Intermediate (WTI) crude futures were at $46.33 per barrel, down 7 cents.
US crude stocks rose last week, adding 1.6 million barrels in the week to July 14 to 497.2 million barrels, industry group the American Petroleum Institute had said on Tuesday.
Outside the United States, supplies from the Organization of the Petroleum Exporting Countries (OPEC) remained high, largely because of rising output from member-states Nigeria and Libya, despite the club's pledge to cut production.
“Nigeria and Libya have made significant progress in reinstating their oil supply. Production in Libya is currently reported at or above 1 million barrels per day, while August loading schedules for Nigeria have risen to just over 2 million barrels per day,” French bank BNP Paribas said.
“The increment of crude oil supply from Nigeria and Libya in June vs. October 2016 reference production levels comes to 450,000 barrels per day on average. This is almost 40 per cent of the 1.25 million barrels per day cut by the OPEC 10 members engaged in supply restraint,” the bank said.
Nigeria, Libya exempt from OPEC deal
Nigeria and Libya are exempt from the deal between OPEC and other producers, including Russia, to cut production by around 1.8 million barrels per day between January this year and March 2018 in order to tighten the market and prop up prices.
“Talk of capping Nigerian and Libyan output has been growing fast (within OPEC). But it is very unlikely that both countries will acquiesce to a cap so soon after restoring production,” BNP said.
China refinery demand
On the demand side, BMI Research warned that China's near record refinery use of crude oil in June would likely fall in the second half of the year.
“The pace of refining throughput growth in China is set to ease in H2, as the Chinese economy loses steam amid intensifying efforts to curb financial risks, and utilisation rates at the independent private refineries soften amid lower quotas and a tighter regulatory environment,” BMI said.