Oil prices drop after Saudi-UAE reach output compromise
Oil prices dropped on Wednesday after Reuters reported Saudi Arabia and the United Arab Emirates had reached a compromise that should unlock an OPEC+ deal to boost global oil supplies as the world recovers from the coronavirus pandemic.
The benchmarks extended their losses after government data showed implied U.S. gasoline demand declining considerably last week. While the U.S. Energy Information Administration said crude stockpiles declined more than expected, in their eighth consecutive draw, the drawdown was overshadowed by lagging gasoline demand.
U.S. fuel stocks were higher even as refinery runs eased back a bit. Gasoline stocks rose by 1 million barrels, compared with expectations for a 1.8 million-barrel drop.
Brent crude slipped 2.26% to $74.76 per barrel. West Texas Intermediate settled 2.82% lower at $73.13 per barrel.
Prices fell earlier in the session after the two Gulf producers agreed for the UAE to increase its baseline production in an output deal that members of the Petroleum Exporting Countries, Russia and other producers, a group known as OPEC+, reached last year, an OPEC+ source told Reuters.
The agreement should now pave the way for OPEC+ members to extend a deal to curb output until the end of 2022, the sources added.
The UAE energy ministry said in a statement that no deal with OPEC+ on its baseline has been reached and deliberations were continuing.
Reference: CNBC
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