A worker checks the valve of an oil pipe at the Lukoil company owned Imilorskoye oil field outside the Siberian city of Kogalym, Russia. File photo: REUTERS/SERGEI KARPUKHIN
A worker checks the valve of an oil pipe at the Lukoil company owned Imilorskoye oil field outside the Siberian city of Kogalym, Russia. File photo: REUTERS/SERGEI KARPUKHIN

Seoul — Oil prices fell more than 1% on Wednesday, weighed down by a weaker oil demand outlook and a rise in US crude inventories despite growing expectations of ongoing Organisation of the Petroleum Exporting Countries (Opec) led supply cuts.

Brent crude futures, the international benchmark for oil prices, were down 87c, or 1.4%, at $61.42 a barrel by 2.31am GMT.

US West Texas Intermediate (WTI) crude futures were down 85c, or 1.6%, at $52.41 per barrel.

The US Energy Information Administration (EIA) cut its forecasts for 2019 world oil demand growth and US crude oil production in a monthly report released on Tuesday.

The EIA lowered its 2019 world oil demand growth forecast by 160,000 barrels per day (bpd) to 1.22-million bpd and wound back its forecast for 2019 US crude production to 12.32-million bpd, 140,000 bpd less than the May forecast.

A surprise increase in US crude stockpiles also kept oil prices under pressure.

“Investors have been concerned about the recent rise in stockpiles in the US,” ANZ bank said in a note.

US crude inventories rose by 4.9-million barrels in the week ended June 7 to 482.8-million barrels, according to data from the American Petroleum Institute on Tuesday. That compared with analysts’ expectations for a decrease of 481,000 barrels.

Official data from the EIA is due at 14.30pm GMT on Wednesday.

Alongside concerns about rising supply, ongoing trade tensions between the US and China, the world’s two biggest oil consumers, weighed on prices. US President Donald Trump said on Tuesday he was holding up a trade deal with China.

“Oil prices have struggled to retain bullish gains as traders stay cautious over heightened geopolitical risks and persistent weakness in the global economic backdrop,” said Benjamin Lu, commodities analyst at Phillips Future in Singapore.

With the next meeting of Opec set for the end of June, the market is eyeing whether the world’s major oil producers would prolong their supply cuts.

Opec, along with non-members including Russia in a group called Opec+, have limited their oil output by 1.2-million bpd since the start of 2019 to prop up prices.

United Arab Emirates energy minister Emirates Suhail bin Mohammed al-Mazroui said on Tuesday that Opec members were close to reaching an agreement on continuing production cuts.

Opec is set to meet on June 25, followed by talks with its allies led by Russia on June 26. But Russia suggested a date change to July 3 to 4, sources within the group previously told Reuters.

Reuters