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Oil holds near multi-month lows as glut fears persist

Published 2017-06-20, 08:44 p/m
© Reuters. Oil holds near multi-month lows as glut fears persist
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TOKYO, June 21 (Reuters) - Oil prices held around multi-month lows in early Asian trading on Wednesday as investors discounted evidence of strong compliance by OPEC and non-OPEC oil producers with a deal to cut global output.

Brent LCOc1 was down 6 cents at $45.96 barrel at 0035 GMT. The global benchmark ended down 89 cents, or 1.9 percent, on Tuesday at its lowest settlement since November.

U.S. crude futures CLc1 for August were trading down 3 cents at $43.48. The July contract, which expired on Tuesday, settled down than 2 percent at its lowest since September.

The Organization of the Petroleum Exporting Countries and other producers agreed to cut output by 1.8 million barrels per day (bpd) for six months from January and compliance with the agreement has reached more than 100 percent.

"The lack of a positive response in oil prices clearly suggests market participants are not convinced that the OPEC's efforts will help shore up prices in a meaningful way in the short-term as shale supply continues to rise in the U.S.," said Fawad Razaqzada, market analyst at futures brokerage Forex.com.

"Unless we see a marked reduction in crude stockpiles, the possibility of further short term falls in the price of oil cannot be ruled out," he added.

The American Petroleum Institute said on Tuesday U.S. crude stockpiles had dropped more than forecast. API/S

A government report is due at 10:30 a.m. EDT (1430 GMT) on Wednesday and the official figures often differ sharply from those of the industry group.

OPEC and non-OPEC oil producers' compliance with the output deal has reached its highest in May at 106 percent last month, a source familiar with the matter said on Tuesday. compliance with the output curbs in May was 108 percent, while non-OPEC compliance was 100 percent, the source said. Another source confirmed compliance by all producers in May was 106 percent.

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