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Oil prices fell 1% Wednesday, and a sharp drop in U.S. crude oil inventories failed to provide lasting support for oil prices as investors worried about global oil demand.
Brent crude oil futures fell $0.65, or 1%, to $63.18 a barrel, while U.S. crude oil futures fell $0.89, or 1.6%, to $55.88 a barrel.
Earlier in the day, Brent crude oil's recent month contract was converted to a discount over the next month's contract, which is known as a positive spread, for the first time since March. Oil market sentiment is sluggish as investors worry that a slowdown in global economic growth will weaken demand for oil.
On the supply side, Kuwait News Agency (KUNA) said Wednesday that Saudi Arabia and Kuwait, members of the Organization of Petroleum Exporting Countries (OPEC), had discussed resuming joint oil field production in the neutral areas of the two countries.
The two countries halted production of Khafji and Wafra oilfields more than four years ago, reducing production by about 500,000 barrels a day, equivalent to 0.5% of global oil supply.
Data released by the American Energy Information Association (EIA) showed that crude oil inventories in the United States fell sharply last week. The EIA said U.S. crude oil stocks fell by 10.8 million barrels in the week ending July 19, with analysts expecting a reduction of 4 million barrels.
After the release of inventory data, oil prices initially rose, but failed to keep up with the increase.
"The market will try to explain that [inventory reduction] may have been caused by [Hurricane Barry], so the market has not overreacted," said Phil Flynn, an analyst at Price Futures Group.
Before Hurricane Barry landed in Louisiana earlier this month, U.S. oil companies shut down some oil production facilities in the Gulf of Mexico.


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