Oil fell for a second day as the International Energy Agency said it’s too early to tell whether output cuts by OPEC and its allies will prevent a surplus, echoing a similar outlook by the producer group itself.
Futures in New York slipped 1.1 percent after sliding 1 percent in the previous session.
While the production cutbacks announced last week “may go some way towards restoring balance to the world market,” there’s still potential for “significant oversupply,” the IEA said in a report.
Analysis from OPEC published Wednesday indicated the curbs may need to be deepened in the second half.
“The market is grappling with different uncertainties,” said Norbert Ruecker, head of macro and commodity research at Julius Baer Group Ltd. in Zurich.
Crude’s still in a bear market after reaching a four-year high in October as investors remain worried over supply and demand. Record American output, which is expected to boom to more than 12 million barrels a day in 2019, is threatening to overwhelm the market.
The U.S. has also allowed some nations to temporarily buy Iranian oil despite the implementation of sanctions, while the unity of the Organization of Petroleum Exporting Countries is at risk.
West Texas Intermediate for January delivery dropped 57 cents to $50.58 a barrel on the New York Mercantile Exchange at 8:42 a.m. local time. Prices declined 50 cents on Wednesday after U.S. stockpile data, erasing earlier gains. Total volume traded Thursday was 37 percent above the 100-day average.
Brent for February settlement slid 51 cents to $59.64 a barrel on London’s ICE Futures Europe exchange, after losing 0.1 percent on Wednesday. The global benchmark crude traded at an $8.82-a-barrel premium to WTI for the same month.
U.S. crude inventories fell by 1.21 million barrels last week, Energy Information Administration data showed Wednesday. That’s a much smaller decline than the 10.2 million barrels cited in an industry report on Tuesday.
While U.S. crude inventories declined for a second week to about 442 million barrels, they are still above the five-year average of 410 million barrels, according to data compiled by Bloomberg. Stockpiles at the nation’s storage hub of Cushing, Oklahoma, increased for a third week to the highest since January, the EIA data showed.
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