Oil extended losses to fall below $ 73 a barrel after U.S. gasoline inventories rose unexpectedly, and on signs that OPEC + is approaching a deal to increase production after the resumption of negotiations by key members.
Futures in New York fell 0.5% after falling 2.8% on Wednesday, the highest since mid-May. U.S. gasoline and distillate inventories – a category that includes diesel – both rose last week, offsetting an eighth weekly draw in U.S. crude inventories, according to data from the Energy Information Administration.
While talks between the UAE and Saudi Arabia are underway, they are closing in on a deal that could give the UAE a more generous production limit next year and allow OPEC + to boost supply in the coming months, said delegates familiar with the discussions.
Oil has fluctuated since the beginning of the month after OPEC + abandoned a plan to increase supply from August due to a standoff with the United Arab Emirates, while a resurgence of Covid- 19 injected more uncertainty into the short-term outlook. The International Energy Agency this Tuesday warned that the market would tighten considerably if the alliance did not add more barrels.
The UAE’s Energy Ministry issued a statement acknowledging the talks, but said no deal had yet been reached with the whole of OPEC +. However, the country’s demands for better terms could lead other members to seek redress for their own grievances, potentially undermining the unity of the alliance. Iraq also pursues higher baseline production, according to one delegate.
The market remains in a bullish structure, although it has eased somewhat. The quick time frame for Brent was 76 cents per barrel in offset – where near-date prices are more expensive than newer ones. This compares to 83 cents a week earlier.
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U.S. gasoline inventories rose more than a million barrels last week, according to the EIA. A Bloomberg survey had forecast a drawdown of 2 million barrels. Distillate inventories increased by 3.7 million barrels, while crude supplies decreased by 7.9 million barrels.
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