London (Reuters): Oil prices fell on Wednesday, weighed down by a rebound in the US dollar from three-year lows hit last week and by an expected rise in US crude production.
Brent crude futures were last down 71 cents at $64.54 a barrel by 1013 GMT, while West Texas Intermediate (WTI) crude futures fell 74 cents to $61.19 a barrel.
The premium of Brent over WTI widened to almost $3.60 a barrel, having neared its narrowest in six months on Tuesday as concern about a bottleneck of Canadian crude imports underpinned US futures.
“A sense of harmony has returned this morning with both crude benchmarks ploughing a southerly furrow as the dollar gains further ground,” PVM Oil Associates analyst Stephen Brennock said.
The dollar rose against other major currencies, buoyed by the rise in short-term US government bond yields their highest in over nine years and ahead of the release of the minutes of the Federal Reserve’s most recent policy-setting meeting, which may signal the pace of any interest-rate rises.
US inventory data is due later in the day and stocks are expected to have risen by 1.3 million barrels in the week to Feb. 16, according to a Reuters poll.
The Organization of the Petroleum Exporting Countries and other producers, including Russia, will discuss extending their existing cooperation for many more years when they meet in June as they seek to avoid major market shocks, the United Arab Emirates’ energy minister told Reuters on Tuesday.
The group has agreed to cut crude output by 1.8 million bpd throughout this year to force global inventories to drain.
Futures prices have also been dented by the physical markets, which are showing signs of seasonal weakness, given that most of the world’s refineries close, either partially or wholly, to conduct maintenance at this time of year and cut their crude intake as a result.