LONDON: Oil prices erased earlier gains on Thursday, as the International Energy Agency (IEA) pointed to the “daunting” task of balancing the market next year amid surging US supply and no movement towards deeper output cuts by OPEC and its allies.
Brent crude futures fell 50 cents to $60.31 a barrel by 0934 GMT, heading for a third session of losses. US West Texas Intermediate futures were down 31 cents at $55.44.
Both benchmarks fell sharply the previous day following a report that US President Donald Trump had weighed easing sanctions on Iran, a move that would potentially boost global crude supply.
A meeting of the Organization of the Petroleum Exporting Countries and allies led by Russia in Abu Dhabi to discuss their deal curbing supply by 1.2 million barrels per day (bpd) did not tackle deepening the cut, Oman’s oil minister said.
He added, however, that Nigeria and Iraq had promised to “fully comply” with the deal by October, which would bring down overall production. Nigeria, Iraq and Russia have, at times, produced above their quota.
“The outlook is not very good for 2020,” the Omani minister, Mohammed bin Hamad al-Rumhy, said.
The new Saudi energy minister, Prince Abdulaziz bin Salman, said any discussion on deeper cuts would be left for the next OPEC meeting.
Also feeding bearish sentiment, the IEA, which advises industrial economies on energy policy, said surging US output would make balancing the market “daunting” in 2020.
The Paris-based agency kept its oil demand growth forecasts for this and next year at 1.1 million bpd and 1.3 million bpd, respectively.
Supporting prices earlier in Thursday’s session, China and the United States made some concessions in a protracted trade war, which has weighed on oil demand forecasts, ahead of a planned meeting in coming days.
“The risk to the downside is currently muted and only a significant thawing in the US-Iranian relationship would change it,” PVM oil analyst Tamas Varga said.
Also giving a floor to prices, the US Energy Information Administration said on Wednesday that US crude oil stockpiles fell last week to their lowest in nearly a year, as refineries raised output and imports fell.
Crude inventories fell for a fourth week, decreasing by 6.9 million barrels in the week to Sept. 6 – more than double analysts’ expectations.
At 416.1 million barrels, US crude inventories were at their lowest since October 2018, the EIA said.
The European Central Bank meets later on Thursday and is expected to ease policy to support flagging growth.