Oil prices drop as supplies increase

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Oil prices dropped on Wednesday as a result of increased supplies in the U.S.

Oil slipped after Russian Federation was said to propose that OPEC and other producers in a global alliance reverse the supply cuts they've been making since early previous year.

Brent crude was trading at $75.83 per barrel, while the US WTI was valued at $66.31.

OPEC and Russian Federation decided together in 2016 to cut their supply in order to push prices up following a crash in prices induced by a global crude production glut.

The outlook for the oil market in the second half of this year is uncertain, analysts say, and OPEC argues there are downside risks to demand.

Traders are holding their breath for the June 22 meeting of oil ministers from OPEC member states in Vienna. The International Energy Agency said Saudi Arabia and other Gulf producers may need to boost supply to offset potential losses of 1.5 million barrels a day from Venezuela and Iran by next year.

Pumped further by global trade war fears, oil prices have since surged to multi-year highs, only to then fall back again somewhat, the IEA said.

"The prospect of easing supply curbs from OPEC-led producers continues to be reflected in oil's overall depressed price", Otunuga said.

US crude oil inventories rose by 830,000 barrels in the week to June 8, to 433.7 million, the American Petroleum Institute said on Tuesday.

Rising U.S. stocks partly reflect a surge in U.S. crude production, which has jumped by nearly a third in the last two years to a record 10.8 million barrels per day (bpd).

While Nigeria reported diminishing oil exports in the wake of force majeure on Bonny Light oil, both Saudi Arabia and Russian Federation this week reported increased oil production for the month of May, at 10.0 million bpd and 11.09 million bpd respectively, sending mixed signals to the oil market.

"With rising production from U.S. shale adding to oil's woes and reviving oversupply concerns, further downside could be a possibility in the short to medium term", Otunuga said.

The U.S. Energy Information Administration report on crude oil inventories is due to be released on Wednesday at 10:30am EDT.

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