By Nse Anthony-Uko (with agency report)
ABUJA (Sundiata Post) – Oil prices fell to the lowest in nearly six weeks on Tuesday as concerns over a potential rise in U.S. crude stocks, adding to swelling oversupply, outweighed OPEC comments that a possible production freeze agreement could last longer than expected.
Global benchmark Brent crude oil futures were trading at $45.20 per barrel at 1338 GMT, down 75 cents day on day and the weakest since Aug. 11.
U.S. West Texas Intermediate (WTI) crude futures were down 60 cents at $42.70 a barrel, also the lowest in nearly six weeks.
Analysts polled by Reuters expected U.S. commercial crude oil inventories to have risen 2.3 million barrels in the week to Sept. 16, paving the way for a bearish market reaction because a rise in stocks indicates growing oversupply.
The American Petroleum Institute (API) is scheduled to release its weekly crude stocks data at 2030 GMT on Tuesday.
Oil prices also reacted to comments made by Venezuela’s Oil Minister Eulogio Del Pino on Monday that global oil supply of 94 million barrels per day (bpd) needs to fall by about a tenth if it is to match consumption.
These outweighed comments made by OPEC Secretary-General Mohammed Barkindo, and reported by RIA news agency, that a potential deal between oil producers to freeze output levels could last one year, longer than previously expected.
Members of the Organization of the Petroleum Exporting Countries (OPEC) and other oil producers are set to hold an informal gathering in Algiers next week, which the oil market hopes could lead to an agreement to freeze production levels.
Algeria’s Energy Minister Noureddine Bouterfa said on Tuesday he was “optimistic” participants would reach consensus on how to prop up the oil market.
“I would not be surprised to see some short-covering in the second half of this week just ahead of the informal OPEC meeting,” said Tamas Varga, lead oil analyst at London brokerage PVM Oil Associates.
Official data released late on Monday confirmed a rise in Saudi Arabian oil exports in July to 7.622 million bpd, up from 7.456 million bpd in June.
“(An output freeze) would only secure an even higher push of Saudi crude oil and would be a case where the proposed cure is worse than the disease,” said Olivier Jakob, managing director of PetroMatrix in Switzerland.
A fire at Saudi Arabia’s Ras Tanura oil terminal which broke out on Tuesday morning and injured eight people did not affect operations and was extinguished, operator Saudi Aramco said.
Technical market indicators were also weak, with WTI likely to test support at $42.78 per barrel soon, after which a fall towards $42 would be likely, according to Reuters analyst Wang Tao.
For Brent, he said prices may test support at $45.63 per barrel and, failing to hold that level, could fall to just over $45 a barre