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Oil prices fell on Wednesday as concerns about global supply rose after the unexpected increase in US inventories, and Saudi Arabia and other major oil producing countries hinted at possible increases.
The US Energy Data Association (EIA) said that US crude oil inventories increased by 2 million 100 thousand barrels by the week of June 1st, and analysts had expected to reduce inventories by 1 million 800 thousand barrels. The storage of refined oil is also increased.
"Oil prices have been hit by an unexpected increase in inventory, the total import volume jumped, overcoming the impact of the increase in the oil refinery start rate," said Matthew Smith, director of ClipperData commodity research.
According to EIA weekly report, crude oil output rose to 10 million 800 thousand barrels last week. Since Brandt crude rose to $80 a barrel last month, output growth has stimulated investors to sell.
"Compared with this time last year, crude oil production continued to grow sharply and weighed heavily on the market," said Andrew Lipow, President of Lipow Oil Associates. US production has increased by 1 million 500 thousand barrels a year earlier than a year ago.
US crude oil fell $0.79, or 1.2%, to $64.73 a barrel, while Brandt's crude oil cut fell by 0.02 US dollars at $75.26 a barrel. In the post settlement transaction, Brent crude rose to $0.18 per barrel.
Because the US crude oil decline is larger than the Brandt crude, the difference between the two spreads is 6.5% wider than the previous day, up to 10.74 US dollars per barrel.
India's oil minister said Saudi Arabia's oil minister told him that Saudi Arabia was reconsidering production cuts, which supported oil prices.
The US government has formally asked Saudi Arabia and other oil exporting countries (OPEC) to increase production, a source told Reuters on Tuesday.
Three sources told Reuters that Venezuelan state owned PDVSA is considering a partial export of oil to force majeure.


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