Oil is giving back its gains amid fears of oversupply

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Source: Reuters – Reuters

Oil prices fell today, Wednesday, abandoning their early gains, after Saudi Aramco said it had received guidance from the Ministry of Energy to increase its production capacity by one million barrels per day.

By 07:40 GMT, Brent crude was down $ 0.41, or 1.1% to $ 36.81 a barrel, while US West Texas Intermediate was down $ 0.42, or 1.2%, to $ 33.94.

Amin Al-Nasser, CEO of Aramco, said that the state-run oil giant received guidance from the Ministry of Energy to increase its production capacity to 13 million barrels per day from 12 million barrels per day at present.

Saudi Arabia has been pumping around 9.7 million barrels per day in the past few months, but it has additional capacity to activate and hundreds of millions of barrels of stored crude.

Prices rose earlier in the day, offsetting nearly half of Monday’s 25% loss, thanks to hopes for lower production due to spending cuts from North American producers to cope with crude prices falling to their lowest levels in several years.

Data from the American Petroleum Institute showed that US inventories of crude rose in the most recent week, while gasoline and distillate stocks declined.







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