Oil prices fall on large US stockpile increase

Oil prices fell for a second day on Wednesday on surging US stockpiles and signs the Organization of the Petroleum Exporting Countries and its allies, are unlikely to change its output policy at a technical meeting next week.

Brent crude futures for May dropped 70 cents, or 0.8 percent, to $85.55 a barrel by 1258 GMT while the more actively traded June contract was down 61 cents, or 0.7 percent, at $85.02. The May contract expires on Thursday. US West Texas Intermediate crude futures for May delivery fell 59 cents, or 0.7 percent, to $81.03. Both benchmarks had fallen by more than $1 in earlier trading. Prices have retreated since climbing to their highest since October last week and remain about 3 percent above the average closing price in the first week of March.

A sharp rise in US crude inventories and expectations for potential inaction by OPEC+ next week prompted further “unwinding” in oil prices as profit-taking accelerates after the mid-March rally, said IG market strategist Jun Rong Yeap.

US crude oil inventories rose by 9.3 million barrels in the week ended March 22, said market sources citing American Petroleum Institute figures on Tuesday. Distillate inventories rose by 531,000 barrels, but gasoline stocks dropped by 4.4 million barrels.

OPEC+ this month agreed to extend output cuts of about 2.2 million barrels per day to the end of June, though Russia and Iraq have had to go to extra lengths to tackle overproduction.

Traders are “watching OPEC members for any sign they may be altering their stance on production quotas,” ANZ analysts said in a report on Wednesday.