Oil prices drop as supplies increase

Oil prices fell on Wednesday, hit by rising supplies in the United States and expectations that producer group Opec could relax voluntary output cuts.

Brent crude LCOc1 was down 30 cents at $75.58 a barrel by 1000 GMT. US light crude CLc1 was 15 cents lower at $66.21.

The Organisation of the Petroleum Exporting Countries and some non-Opec producers, including Russia, started withholding output in 2017 to reduce a supply overhang and prices have risen by around 60 percent over the last year.

The outlook for the oil market in the second half of this year is uncertain, analysts say, and Opec argues there are downside risks to demand.

Opec and other producers will meet on June 22-23 in Vienna to discuss future production.

“More oil from Opec+ is the base case,” said Bjarne Schieldrop, analyst at Swedish bank SEB.

“Saudi Arabia and Russia have already started to lift production,” he said. “Unofficial sources have said Russia will propose to return production back to the October 2016 (level), i.e. removing the cap altogether over a period of three months.”

Lukman Otunuga, analyst at brokerage FXTM, said higher oil production and forecasts of more to come were already undermining prices:

“The prospect of easing supply curbs from Opec-led producers continues to be reflected in oil's overall depressed price.”

US crude oil inventories rose by 830,000 barrels in the week to June 8, to 433.7 million, the American Petroleum Institute said on Tuesday.

Rising US stocks partly reflect a surge in US crude production C-OUT-T-EIA, which has jumped by almost a third in the last two years to a record 10.8 million barrels per day (bpd).