HONG KONG • Oil fell yesterday, hit by improved prospects for United States output and a glut in refined products, while analysts largely expected no impact on supplies from talk of a potential producer meeting to discuss propping up prices.
International benchmark Brent crude futures were down 63 cents at US$44.35 per barrel at 8.39am GMT (4.39pm Singapore time).
US West Texas Intermediate (WTI) crude oil futures were trading at US$42.13 per barrel, down 64 cents from their last settlement.
Traders said excess supplies of crude and refined fuel products were weighing on markets, while a proposed meeting by oil producers was unlikely to result in significant market tightening.
"Oil eased lower as another round of proposed production freeze talks by Opec failed to excite investors," ANZ Bank said.
Venezuela, a member of the Organisation of the Petroleum Exporting Countries (Opec), is trying to drum up support for a producer meeting to decide measures that would buoy oil prices.
When producers last held such talks in April, Opec members failed to agree on any measures.
"Renewed attempts at verbal intervention by Opec will help bolster oil market sentiment, although the group will struggle to rebuild its role as a backstop to Brent," oil analysts at BMI Research said in a note to clients.
The US Energy Information Administration (EIA) added to the market's unease when on Tuesday, it forecast a smaller decline in US crude oil production this year than it projected a month ago as drilling activity picks up.
The agency now expects US oil output to fall by 700,000 barrels per day (bpd) this year to 8.73 million bpd, compared with the 820,000-bpd drop it previously forecast.
A global products glut that has led storage tanks from Houston to Singapore to reach near capacity is also weighing on oil prices, as analysts warn that only large- scale refinery run cuts can clear the excess.
In Singapore, oil refining profits dropped to two-year lows yesterday, in the latest sign that the industry is pumping too much fuel for the market to absorb.
Oil has fluctuated after tumbling more than 20 per cent into a bear market and closing below US$40 a barrel last week for the first time in almost four months.
While there is an inventory overhang of US crude and fuel stockpiles, Goldman Sachs forecasts the market will be in modest deficit in the second half of this year and the EIA sees consumption outpacing supply in 2017.