LONDON (Reuters) – Oil prices declined on Wednesday, holding below $60 a barrel on data showing a bigger-than-expected rise in U.S. crude stocks, but the prospect of deeper output cuts by OPEC and its allies offered support.
FILE PHOTO: Pumpjacks are seen during sunset at the Daqing oil field in Heilongjiang province, China August 22, 2019. REUTERS/Stringer
Brent crude futures LCOc1 were down 25 cents, or 0.43%, to $59.45 a barrel at 0834 GMT.
West Texas Intermediate (WTI) crude futures CLc1 for December delivery fell 32 cents, or 0.59%, to $54.16 per barrel. The November contract expired on Tuesday at $54.16.
U.S. crude stocks rose by 4.5 million barrels to 437 million barrels in the week ended Oct. 18, compared with analysts’ expectations for a gain of 2.2 million barrels, data from industry group the American Petroleum Institute showed.
Inventory data from the U.S. Energy Information Administration (EIA) is due later on Wednesday.
Helping underpin prices, the Organization of the Petroleum Exporting Countries (OPEC) is mulling whether to deepen production cuts amid concerns of weak demand growth next year.
Some analysts were sceptical of OPEC’s ability to further cut output.
“It will be a struggle to get members to cut a significant amount more, particularly if you have some members who are not pulling their weight when it comes to cuts,” Dutch bank ING said in a note.
OPEC and other oil producers including Russia, a group known as OPEC+, have pledged to cut production by 1.2 million barrels per day (bpd) until March 2020. OPEC and other non-members are scheduled to meet again Dec. 5-6.
Meanwhile, easing trade tensions between China and the United States, the world’s two largest economies and biggest oil consumers, were also helping to cushion overall sentiment for oil, traders said.
U.S. President Donald Trump said earlier this week that efforts to end the trade war with China were going well, a view echoed by Chinese Vice Foreign Minister Le Yucheng on Tuesday.
“With the headwinds of strong U.S. producer hedging and high freight rates fading, we expect stronger Brent timespreads and higher prices in coming weeks, with upside risk to our year-end $62 per barrel forecast,” Goldman Sachs said in a note.
The investment bank expects Brent prices to continue trading around $60 a barrel in 2020.
Additional reporting by Koustav Samanta; Editing by Richard Borsuk and Mark Potter