Oil prices sank on Thursday due to doubts over the capability of the producers to extend the record output cuts, which was further heightened by concerns over the in the fuel inventories in the U.S.A.
Brent crude futures have eased by 29 cents to come down to $39.50 a barrel by 0839 GMT while heading for the first fall in its six sessions. U.S. WTI (West Texas Intermediate) crude futures went down by 53 cents to hit $36.76.
Russia and Saudi Arabia, the biggest oil producers of the world, have reached an agreement to support an extension till July for the 9.7 million BPD (barrels per day) supply cuts backed in April by the OPEC+ group, which comprises of the Organization of the Petroleum Exporting Countries and other vital producers.
However, they did not reach an agreement on holding the OPEC+ meeting on Thursday for discussing the cuts. The OPEC sources said that there might see a conditional deepening of reductions by the countries that have failed to comply with the targets till now.
The United Arab Emirates, Kuwait, and Saudi Arabia are not arranging the extension of voluntarily added output cuts of 1.18 million BPD after June. This indicates the crude supply might rise next month irrespective of OPEC+ decision.
While the laggards of the production group have been given two weeks for proving that they are ready to share the burdens of lower output levels, the market also has the same amount of time to start contemplating. Volatility is bound to come up as a factor in the next couple of weeks.
While weighing in on the prices, official U.S. records showed that gasoline stocks have increased by 2.8 million barrels, which is triple of what was expected by the analysts. Distilled shares increased by 9.9 million barrels, which is four times the expected amount.