Oil fell on Thursday as increasing exports from Iraq underlined the global oversupply situation, counteracting the effects of a surprise fall in U.S. inventories the day before.
Brent futures were at $39.51 at 1258 GMT, down 33 cents from Wednesday’s close.
U.S. crude futures were at $37.53 per barrel, down 22 cents on the day.
An official from the state-run South Oil Company said on Thursday that oil exports from Iraq’s southern ports have risen to an average of 3.494 million barrels per day (bpd) in April. This was above the 3.286 million bpd average for March.
U.S. crude inventories fell 4.9 million barrels in the week to April 1, compared with analysts’ anticipations for an increase of 3.2 million barrels, according to data from the Energy Information Administration on Wednesday.
“We are in the aftermath of yesterday’s (EIA) data, but if you zoom out there’s still oversupply and record inventories,” said Hans van Cleef, senior energy economist at ABN Amro in Amsterdam.
“Production numbers from places like Iran and Iraq are in focus with people looking to see how it translates into the overall supply picture.”
In Europe, North Sea oil field maintenance expected next month lent support to Brent futures, which are priced off North Sea supplies.
A scheduled meeting of major oil producers on April 17 to freeze output around current levels, which in most cases remains at or near record highs, would do little to reduce a surplus in production with at least 1 million barrels of crude pumped every day in excess of demand.
Feeding into doubts about whether any deal can be done, Iranian Oil Minister Bijan Zanganeh said Iran will continue to raise its production and exports until it hits the market position it enjoyed before the imposition of sanctions, the semi-official Tasnim news agency reported.
Goldman Sachs said it was “less willing to believe in a sustained OPEC production freeze or cut” and instead expected OPEC’s production to rise by 600,000 barrels per day (bpd) this year and by 500,000 bpd in 2017.
As a result of this, and also production data from the United States, Goldman said it was “somewhere between in line and modestly bearish for prices … (and that) $35 per barrel WTI is not too high and not too low but just right.”