Oil prices fell for a third consecutive day on Wednesday, driven by rising crude inventories and production in the U.S. as well as increasing hopes of a ceasefire agreement in the Middle East.
Brent crude futures for July fell 47 cents, or 0.5%, to $85.86 a barrel by 0005 GMT. U.S. West Texas Intermediate crude for June declined 53 cents, or 0.6%, to $81.40 per barrel.
According to market sources citing American Petroleum Institute figures on Tuesday, U.S. crude oil inventories swelled last week by 4.906 million barrels, while gasoline and distillate stockpiles fell. The official data from the EIA is due later on Wednesday.
Additionally, U.S. crude production is showing signs of ramping up, with output rising to 13.15 million barrels per day (bpd) in February from 12.58 million bpd in January, marking the biggest monthly increase in about 3-1/2 years, the Energy Information Administration said on Tuesday.
The expectations of a potential ceasefire agreement between Israel and Hamas, following a renewed push led by Egypt to revive stalled negotiations, also contributed to the downward pressure on oil prices. An end to the conflict could reduce concerns about a broadening of the conflict that could disrupt supply from the Middle East.
Offsetting the bearish factors, a Reuters survey found that OPEC’s oil output was seen falling by 100,000 bpd in April to 26.49 million bpd, reflecting lower exports from Iran, Iraq and Nigeria amid the ongoing voluntary supply cuts by some members agreed with the wider OPEC+ alliance.