Oil prices fell on Wednesday after a rise in U.S. crude inventories and ongoing high output from OPEC producers revived concerns of a fuel supply overhang.
Brent crude futures, the international benchmark for oil prices, were at $48.63 per barrel at 0656 GMT, down 21 cents, or 0.4 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures were at $46.20 per barrel, down 20 cents, or 0.4 percent.
Since the start of the year, crude prices are down around 15 percent, making oil one of the worst performing commodities in 2017.
U.S. crude stocks rose last week, adding 1.6 million barrels in the week to July 14 to 497.2 million barrels, industry group the American Petroleum Institute said on Tuesday.
Outside the United States, supplies from the Organization of the Petroleum Exporting Countries (OPEC) remained high, largely due to rising output from member-states Nigeria and Libya, despite the club’s pledge to cut production.
“Production in Libya is currently reported at or above 1 million barrels per day, while August loading schedules for Nigeria have risen to just over 2 million barrels per day,” BNP Paribas said.
The French bank said that the rising output from Nigeria and Libya eroded 40 percent of the 1.25 million barrels per day cut by other OPEC members since the beginning of the year.
A Saudi Arabian industry source said on Tuesday that the kingdom, which is by far OPEC’s biggest producer, was committed to tighten the market.
“We hope to accommodate the rise in production from Libya and Nigeria taking into consideration other supply adjustments as well. But we emphasize that we have to work together with other producers and with the two countries,” the source said.
Nigeria and Libya are exempt from the deal between OPEC and other producers, including Russia, to cut production by around 1.8 million barrels per day between January this year and March 2018 .
“Talk of capping Nigerian and Libyan output has been growing fast (within OPEC). But it is very unlikely that both countries will acquiesce to a cap so soon after restoring production,” BNP said.
On the demand side, BMI Research warned that China’s near record refinery use of crude oil in June would likely fall in the second-half of the year.
“The pace of refining throughput growth in China is set to ease in H2, as the Chinese economy loses steam amid intensifying efforts to curb financial risks, and utilisation rates at the independent private refineries soften amid lower quotas and a tighter regulatory environment,” BMI said.
