SINGAPORE: Oil prices fell for a third day on Thursday amid anxiety that supply may rise after the collapse this week of talks among major producers, potentially causing the current output agreement to be abandoned.
Brent crude oil futures were down 43 cents, or 0.6%, at $73 a barrel by 0158 GMT. US West Texas Intermediate futures were down 51 cents, or 0.7%, at $71.69 a barrel.
Brent prices have fallen about 5.3% since Monday’s close after talks between the Organization of the Petroleum Exporting Countries and its allies, including Russia, known as OPEC+, fell apart when de facto leader Saudi Arabia refused demands from the United Arab Emirates to raise its output under the group’s supply cut agreement.
“Bullishness over prospects of a tighter market gave way to concerns over what a non-unified OPEC could mean for further production policies,” ANZ analysts said in a note on Thursday, adding that a lack of new supply agreement to feed a quickly recovering world economy is creating uncertainty.
OPEC+ has restrained supply for more than a year since demand crashed during the coronavirus pandemic.
The group is maintaining nearly 6 million barrels per day (bpd) of output cuts and was expected to add to supply, but three days of meetings failed to close divisions between the Saudis and the Emiratis.
Russia is trying to mediate between Saudi Arabia and the UAE to help strike a deal to raise oil output, three OPEC+ sources said on Wednesday.
Prices, however, found some support from a large drop in oil inventories in the United States.
Oil stockpiles in the world’s biggest oil user fell by 8 million barrels for the week ended July 2, according to two market sources, citing American Petroleum Institute figures, compared with an estimate of a 4 million barrel fall by analysts in a Reuters poll.
Government inventory data is due on Thursday, pushed back a day following the US Fourth of July holiday on Monday.
US oil production declines this year are expected to lessen with the Energy Information Administration (EIA) saying on Wednesday that output will be 11.10 million bpd in 2021, down by 210,000 bpd from 2020, versus its previous forecast for a drop of 230,000 bpd.
Concerns over the coronavirus also weighed on prices with Japan, the world’s fourth-largest oil user, set to declare a state of emergency for the Tokyo area through Aug. 22 amid a new wave of infections and South Korea reporting its highest ever daily COVID-19 cases.