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Oil prices fall on data on growth of reserves in U.S.

2 August 2017 11:23 (UTC+04:00)
Oil prices fall on data on growth of reserves in U.S.

By Sara Israfilbayova

World oil prices declined on August 2, as investors play out the data of the American Petroleum Institute (API) on the reserves of “black gold.”

The global oil benchmark Brent is down almost 1 percent and stands at $51.31 per barrel, while U.S. West Texas Intermediate (WTI) is down 1 percent and is $48.69 per barrel.

API reported that oil reserves in the U.S. for the week ended on July 28, unexpectedly increased by 1.8 million barrels, to 488.8 million. However, analysts had expected that stocks, on the contrary, would decline - by 2.9 million barrels, RIA Novosti reported.

Jeffrey Halley of futures brokerage OANDA said following the API's report "traders stampeded for the door to lock in profits from the last eight days' bull-run."

Moreover, experts expect data from the U.S. Department of Energy on oil reserves in the country. They forecast that commercial oil reserves in the U.S. (excluding the strategic reserve) for the week ended on July 28 fell by 0.6 percent, or 2.9 million barrels, to 480.5 million barrels.

The U.S. Department of Energy will release data on oil reserves over the past week on August 2. Experts polled by S&P Global Platts, on average, predict a decline in oil reserves by 2.8 million barrels.

The Economist Intelligence Unit said that despite the cuts "the global market remains oversupplied," and it warned that "there is no guarantee that further cuts will be sufficient to rebalance the oversupplied global oil market."

OPEC and other oil producing countries reached an agreement in December 2016 to curtail oil output jointly and ease a global glut after more than two years of low prices. OPEC agreed to slash the output by 1.2 million barrels per day from January 1.

Non-OPEC oil producers such as Azerbaijan, Bahrain, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Russia, Sudan, and South Sudan agreed to reduce output by 558,000 barrels per day starting from January 1, 2017.

The parties decided to extend the production adjustments for a further period of nine months, in May 2017.

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