Oil Prices Fall as US Crude Stockpiles Surge and OPEC+ Shows no Signs of Changing Output Policy
In a report by Reuters, oil prices experienced a second consecutive day of decline on Wednesday. This drop was attributed to a significant increase in crude stockpiles in the US, the world’s largest oil consumer, and indications that major producers are unlikely to adjust their output policy at an upcoming technical meeting.
Market Trends and Price Movements
Brent crude futures for May saw a decrease of 0.9 percent, dropping 74 cents to $85.51 a barrel. Meanwhile, US West Texas Intermediate crude futures for May delivery fell by 0.8 percent, amounting to a 64-cent decline at $80.98.
Despite reaching their highest levels since October last week, oil prices have retreated this week, remaining approximately 3 percent above the average closing price in the first week of March.
Analysis and Expert Insights
Jun Rong Yeap, a market strategist at IG in Singapore, commented on the situation, stating, “A sharp rise in US crude inventories and expectations for a potential inaction by OPEC+ in its output policy next week saw further unwinding in oil prices in today’s session, as profit-taking accelerates following a strong rally in mid-March.”
The American Petroleum Institute reported a significant increase of 9.3 million barrels in US crude oil inventories for the week ending March 22. While distillate inventories also rose, gasoline stocks experienced a decrease.
Outlook on OPEC+ and Output Policy
Sources within OPEC+ revealed that the group is unlikely to make any changes to its oil output policy until a full ministerial meeting in June. In the meantime, an online meeting of the Joint Ministerial Monitoring Committee is scheduled for April 3 to assess market conditions and members’ adherence to output cuts.
Recent agreements within OPEC+ to extend output cuts until the end of June have been put into action, with countries like Russia and Iraq making efforts to comply with production targets.
As OPEC members, including Iraq, have admitted to exceeding production limits, analysts are closely monitoring any potential shifts in production quotas within the group.