An oil well is seen near Denver, Colorado. Picture: REUTERS
An oil well is seen near Denver, Colorado. Picture: REUTERS

London — Oil prices fell on Wednesday, hit by rising supplies in the US and the expectation that producer cartel Opec may relax voluntary output cuts.

Benchmark Brent crude oil was down 35c at $75.53 a barrel by 7.30am GMT. US light crude was 40c lower at $65.96.

Opec and some non-Opec producers, including Russia, started withholding output in 2017 to reduce a global supply overhang and prices have risen by around 60% over the past year.

But Opec said on Tuesday the outlook for the oil market in the second-half of this year was highly uncertain, and warned of downside risks to demand.

Opec will meet on June 22 in Vienna, Austria, to discuss future production policy.

"The prospect of easing supply curbs from Opec-led producers continues to be reflected in oil’s overall depressed price," said Lukman Otunuga, analyst at futures brokerage FXTM.

Dutch bank ING, however, said some Opec members would "struggle to push production back to October 2016 levels".

In the US, the American Petroleum Institute (API) said on Tuesday that crude oil inventories rose by 830,000 barrels in the week to June 8, to 433.7-million.

Rising US stocks are in part a result of the surge in US crude oil production, which has jumped by almost a third in the past two years to a record 10.8-million barrels a day.

With output in Russia rising back above 11-million barrels a day in June and Saudi production climbing back above 10-million barrels a day, supplies from the top three producers are increasing.

"With rising production from US shale adding to oil’s woes and reviving oversupply concerns, further downside could be a possibility in the short to medium term," Otunuga said.

Official US production and inventory data is due to be published on Wednesday by the Energy Information Administration (EIA).

Reuters

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