Oil prices dropped early on Thursday as the market assesses the prospect of higher crude supply from the OPEC+ group after a reported compromise between key OPEC members Saudi Arabia and the United Arab Emirates (UAE).
As of 11:21 a.m. EDT on Thursday, WTI Crude prices were down by 0.53 percent at $72.78 and Brent Crude was falling by 0.56 percent at $74.37.
Oil prices extended losses from Wednesday, when the market fell sharply after reports emerged that Saudi Arabia and the UAE had resolved their nearly two-week-long standoff over baseline production levels that was blocking a unanimous OPEC+ deal on oil supply. Under the compromise, the UAE will see its baseline production level lifted to 3.65 million barrels per day (bpd) after the current pact expires in April 2022, according to a Reuters source. The current baseline for the UAE is around 3.17 million bpd.
A new date for OPEC and OPEC+ meetings will be set soon, various sources told media on Wednesday.
Oil came under pressure on Wednesday also because of the weekly inventory report from the Energy Information Administration. Although the EIA reported a crude oil inventory draw of 7.9 million barrels for the week to July 9, it estimated builds in gasoline stocks despite lower production at U.S. refineries. Gasoline stocks increased by 1 million barrels for the week to July 9, which compared with a significant draw of 6.1 million barrels reported for the previous week. Production of gasoline last week averaged 9.9 million bpd, which compared with 10.6 million bpd for the previous week.
"The data also showed a large reduction in implied demand over the week, with total product supplied falling by 2.24MMbbls/d. Gasoline and distillate fuel oil implied demand fell by 760Mbbls/d and 676Mbbls/d respectively," ING strategists Warren Patterson and Wenyu Yao said on Thursday, commenting on the "not very supportive" report.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More