Oil prices fall as OPEC increases production

Oil prices fall as OPEC increases production”

Brent spot crude oil futures dropped 30 cents, or 0.4 percent, to $73.91 a barrel by 0435 GMT, adding to a 1.8 percent loss in the previous session.

Oil prices rose, with United States crude futures jumping more than 2%. It has rebounded to above $70 a barrel since April as the Opec cartel, which pumps a third of the world's crude, cut supplies to bring the market back into balance. The September contract expires today and the more-active October contract was down 0.5 percent to $75.20, Reuters said.

Prices remain buoyed by a tight supply outlook, with global inventories down from record highs in 2017 and USA inventories at a three-year low, said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut.

West Texas Intermediate (WTI) crude for September delivery traded at $70.12 a barrel on the New York Mercantile Exchange, down 1 cent, at 9:48 Tokyo. Stockpiles at the Cushing storage hub in Oklahoma decreased 500,000 bbl in the week ended July 27, according to forecast compiled by Bloomberg.

"A fresh dose of price angst has come from an unexpected source", said Stephen Brennock of oil broker PVM.

EIA also reported on Wednesday that USA oil production remained unchanged at 11 million barrels per day during the week ending July 20. Those concerns have been amplified as Canada's Suncor Energy works to fully restore operations at its Syncrude oil sands facility in western Canada, where supplies have been disrupted by a power outage earlier this year.

"Equity markets are in positive territory as trade tensions between the U.S. and China are improving", said analyst David Madden at CMC Markets UK. Workers in three oil fields in the North Sea started shutting down output before industrial action planned for Monday, while some tankers altered course after Saudi Arabia suspended crude shipments through a key Red Sea transit route.

And concern persists that there won't be enough spare OPEC capacity to make up for losses from producers like Venezuela.

An estimated 4.8 million barrels a day of crude oil and refined products flowed through the Bab al-Mandeb strait in 2016 toward Europe, the US and Asia, according to the US Energy Information Administration.

Oil was steady near $70/bbl as supply risks from Saudi Arabia to the United Kingdom threaten to strain global markets.

"The best-case scenario is that the US provides meaningful sanction waivers in the run-up to the mid-term elections and Iran can get away with a loss of around 500-700,000 barrels per day of exports", PVM Oil Associates Tamas Varga said in a note. "China trade wars continue to weigh on prices, while the halt in Saudi shipments through the Red Sea waterway has seemingly failed to provide a bullish fillip", he said.

Brent and US crude both logged their biggest daily drop for the month on July 11, after Libya resolved a major disruption to its crude exports and Saudi Arabia reported a almost 500,000 bpd jump in its oil output.

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