Oil prices slid on Wednesday on bearish U.S. petroleum inventory data and doubts that production cuts promised by OPEC and Russia would be deep enough to end a supply overhang that has weighed on markets for more than two years.
Brent futures LCOc1 fell 93 cents, or 1.7 percent, to settle at $53.00 a barrel, while U.S. crude CLc1 lost $1.16, or 2.3 percent, to settle at $49.77.
The U.S. Energy Information Administration EIA said crude inventories fell 2.4 million barrels during the week ended Dec. 2, which was more than the 1 million-barrel draw analysts had forecast in a Reuters poll.
Stocks at the Cushing, Oklahoma, delivery hub for U.S. crude futures, however, increased by a hefty 3.8 million barrels last week, the most since 2009, the data showed.
Reaction to the EIA report was muted, analysts said, in part because the results were similar to the data published by the American Petroleum Institute (API), an industry group, late on Tuesday.
“Focus at the moment is on the key producers and OPEC and growing doubts non-OPEC producers will be able to come up with 600,000 barrels of cuts,” said Matt Smith, director of commodity research at ClipperData in Louisville, Kentucky.
The Organization of the Petroleum Exporting Countries last week agreed to slash output by around 1.2 million barrels per day beginning in January to reduce global oversupply and prop up oil prices.
OPEC hopes non-OPEC countries will contribute a further 600,000 bpd of cuts. Russia has said it would reduce output by around 300,000 bpd.
Nigeria’s Oil Minister, Emmanuel Ibe Kachikwu, said on Wednesday OPEC’s deal to cut production will go ahead even if Russia becomes the only non-OPEC country to commit to reduce output at a meeting this weekend.
“While this weekend’s meeting with non-OPEC producers will likely be hyped as a major breakthrough, we are maintaining an opinion that any non-OPEC production cuts will be largely of the involuntary variety,” Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates, said in a note.
Oil prices surged almost 20 percent after OPEC and Russia announced plans to cut production, but since then both OPEC and Russia have reported record production.
In addition, Nigeria, which is exempt from the OPEC cuts, said on Wednesday it hoped to boost its oil production to 2.1 million bpd in January, up from 1.9 million bpd now.