Hong Kong - Brent crude traded below $50 a barrel after ending the longest run of gains since 2012 as Russia was said to oppose any proposal to deepen OPEC-led production cuts.
Futures were little changed in London after losing 7 cents on Tuesday, snapping an 11% increase over eight sessions. Russia wants to continue with the current deal and any further supply curbs would send the wrong message to the market, according to government officials.
US crude stockpiles probably resumed declines last week, a Bloomberg survey showed before an Energy Information Administration report on Thursday.
While prices have surged during the past week, oil remains in a bear market after concerns that rising global supply will offset output cuts from the Organisation of Petroleum Exporting Countries and its partners. Libya and Nigeria, exempt from the OPEC-led curbs, accounted for half of the group’s production boost last month, according to data compiled by Bloomberg.
“The environment at the moment isn’t conducive for prices to extend the rally,” said Daniel Hynes, a Sydney-based analyst at Australia & New Zealand Banking. “Supply dynamics are against the market. It’ll probably be a bit of a wait-and-see period to evaluate the impact of sub-$50 oil.”
Brent for September settlement was at $49.59 a barrel on the London-based ICE Futures Europe exchange, down 2c at 07:22. The contract fell 0.1% to $49.61 on Tuesday, the first decline in nine sessions. Prices dropped 9.3% in the previous quarter.
West Texas Intermediate for August delivery was down 6c to $47.01 a barrel on the New York Mercantile Exchange. Transactions on Tuesday will be booked on Wednesday for settlement purposes because of the US Independence Day holiday. Prices gained almost 11% in the eight days through on Monday.
Deepening cuts would suggest that OPEC, Russia and their allies are nervous that the pact to reduce output by a combined 1.8 million barrels a day through March 2018 isn’t doing enough to support prices, an official said.
US crude inventories probably decreased by 2.5 million barrels last week, according to the median of four estimates in the Bloomberg survey before the EIA report. Qatar Petroleum is taking “legal actions” after Abu Dhabi National Oil declared force majeure to halt shipments from Qatar of condensate, a light oil liquid, according to QP’s chief executive office.