Oil prices fell for a third day on Thursday amid uncertainty about supplies after the collapse of OPEC+ talks this week raised the possibility that their deal to curb output could fall apart.
Brent crude oil futures were down 35 cents, or 0.4%, at $ 73.08 a barrel by 1355 GMT and U.S. West Texas Intermediate futures were down 51 cents, or 0.7%, at $ 71.69.
Both contracts hit their lowest in about three weeks earlier in the session.
But the Brent six-month spread remains in backwardation with the front-month price higher than later months. “This suggests that no immediate flooding of the market is anticipated,” PVM analysts said in a note.
Brent prices have fallen as much as $ 5 a barrel since Monday’s close after the collapse of negotiations on Monday between the Organization of the Petroleum Exporting Countries and allies including Russia, a group known as OPEC+.
Saudi Arabia refused demands from the United Arab Emirates to raise the amount it produced under terms of a pact on cutting supplies that was first agreed by OPEC+ in 2020, when oil prices have plunged due to the COVID-19 pandemic.
The group is still holding back almost 6 million barrels per day (bpd) of output and had been expected reduce those cuts this year but three days of talks failed to resolve the dispute.
Russia was trying to mediate to help to strike a deal to raise oil output, OPEC+ sources said on Wednesday.
Concerns about the pandemic also weighed on prices. Japan, the world’s fourth-largest oil user, is set to declare a state of emergency for the Tokyo area and South Korea reported its highest daily tally of COVID-19 cases.
But prices found some support from a large drop in U.S. inventories. Crude stockpiles in the world’s biggest oil consumer fell by 8 million barrels for the week ended July 2, two market sources said, citing American Petroleum Institute figures.
Government inventory data is due on Thursday, pushed back a day after a U.S. holiday Monday.
A fall in U.S. oil production is expected to slow this year, with the Energy Information Administration (EIA) saying on Wednesday output would 11.10 million bpd in 2021, more than previously forecast.