Crude oil prices fell on Thursday following news over the possible reversal of Saudi Arabia’s output cuts. However, the bullish inventories data released by the API supported prices. WTI futures were down by 1.03% to trade at $61.06. Similarly, Brent futures fell by 0.89% to $64.32.
Saudi Arabia likely to reverse its output cut
Saudi Arabia, the second-largest crude oil producer in the world, is likely to increase its crude oil production in the ensuing months. Early last month, the kingdom pledged to cut output by 1 million bpd. The announcement fuelled a positive sentiment in the market as crude oil prices hit a 1-year high.
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According to the kingdom’s advisers, it now plans to announce the reversal of its decision during next month’s OPEC+ ministerial meeting. The move is founded on increased confidence over the recovery of crude oil demand and prices. However, the country could still continue with the production cuts if the circumstances change. If it decides to increase its crude oil output, it will do so from April since its current commitment runs till March.
On Wednesday, Prince Abdulaziz bin Salman, the country’s energy minister, indicated that OPEC+ member countries need to be cautious about the high uncertainty in the market. He noted, “We are in a much better place than we were a year ago, but I must warn, once again, against complacency.”
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Drop in US crude oil inventories
The reported decline in the weekly stockpiles have offered support to crude oil prices. On Thursday, the American Petroleum Institute (API) indicated that the amount of oil in storage dropped by 5.8 million barrels. Experts had predicted that the agency will present a reading of -2.175 million barrels.
This is the fourth week in a row that the agency has released bullish figures. In the last release, the inventories had dropped by 3.5 million barrels.
API’s data comes at a time when the US is facing a cold snap. Various states in the country’s central and southern regions are experiencing frigid conditions that have resulted in deaths and expansive power outages. Texas, which is the largest crude oil producing state in the country, is the hardest hit. Crude oil wells and refineries in the area have had to halt operations. This has affected the commodity’s supply in the area; fuelling the surge in crude oil prices.
Investors looking to trade oil are now keen on EIA’s data expected later today. Analysts expect crude oil inventories to have dropped by -2.429 million barrels in the past week. This is a lower figure compared to the -6.644 million barrels presented in the previous release.
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