Oil prices fell 1% on Wednesday, failing to draw lasting support from a large decrease in U.S. crude stockpiles as investors worried about global oil demand, APA reports citing Bloomberg.
Brent crude LCOc1 futures dropped 65 cents, or 1%, to settle at $63.18 a barrel, while U.S. West Texas Intermediate (WTI) crude CLc1 futures fell 89 cents, or 1.6%, to settle at $55.88 a barrel.
Earlier in the session, the front-month Brent contract LCOc1 flipped to trade at a discount to the second-month contract LCOc2, a market structure known as contango, for the first time since March. Sentiment in the oil market has darkened as investors worry that slowing global economic growth will weaken demand for oil.
On the supply side, OPEC members Saudi Arabia and Kuwait have discussed resuming oil production in jointly operated fields in the Saudi–Kuwaiti Neutral Zone, Kuwaiti state news agency KUNA said on Wednesday.
The two countries halted output from the oilfields - Khafji and Wafra - more than four years ago, cutting some 500,000 barrels per day, or 0.5 percent of global oil supply.
Oil prices initially rose after Energy Information Administration data on Wednesday showed a large drawdown in U.S. crude stockpiles. Crude inventories USOILC=ECI fell by 10.8 million barrels in the week to July 19. Analysts expected a decrease of 4 million barrels.
But the gains did not hold.
“The market is going to try to say that (the drawdown) was probably due to (Hurricane Barry), and so the market is not overreacting to it,” said Phil Flynn, an analyst with Price Futures Group in Chicago.
U.S. oil companies cut some production in the Gulf of Mexico ahead of Hurricane Barry, which came ashore in Louisiana earlier this month.