Oil prices slipped on Wednesday, after an unexpected rise in U.S. crude stockpiles dashed hopes that a deal between OPEC and rival producers could effectively manage global crude oversupply.
The latest inventories report released by the American Petroleum Institute showed that U.S. crude stocks increased by 11.4 million barrels in the latest week. The strong inventory build is surprisingly larger compared to analysts’ estimates of a 3.3 million barrel weekly increase.
Brent crude, down 75 cents, traded at $31.05 a barrel. U.S. crude, down $1.09, settled at $30.06 a barrel.
Crude oil prices have been free-falling for nearly two years, with total losses estimated at 77%.
Oil prices recovered on Tuesday increased as much as 6% on hopes of OPEC closing a deal with non-OPEC oil producers to cut oil production. Iraq’s oil minister hinted that Saudi Arabia and Russia, two of the world’s top oil producers, have become more “flexible” when it comes to reducing oil supplies.
ANZ bank, however, said on Wednesday that they “consider the likelihood of any agreement between these parties as extremely low.”
A deal between OPEC and rival producers remains elusive. Saudi Arabia isn’t quite ready to cut oil production just yet and expects the oil market to rebalance within the year. Russia, on the other hand, has refused to cooperate.