London — Oil prices dropped on Wednesday after sources told Reuters Saudi Arabia and the United Arab Emirates had reached a compromise that should unlock an OPEC+ deal to boost global oil supplies as the world recovers from the coronavirus pandemic.
The two Gulf producers agreed for the UAE to increase its baseline production in an output deal that members of the Petroleum Exporting Countries (OPEC), Russia and other producers, a group known as OPEC+, reached last year, the sources said.
The agreement should now pave the way for OPEC+ members to extend a deal to curb output until the end of 2022, the sources added.
Brent crude was down 32 cents, or 0.42%, at $76.17 a barrel by 1430 GMT, after dropping by over $1 earlier. West Texas Intermediate was off by 41 cents, or 0.54%, at $74.84 a barrel.
The UAE energy ministry said in a statement that no deal with OPEC+ on its baseline has been reached and deliberations were continuing.
Disagreement between OPEC’s defacto leader Saudi Arabia and the UAE led to a collapse in talks last week on boosting production to cool oil prices.
Oil prices were earlier under pressure after data showed China’s crude imports dropped by 3% from January to June compared with a year earlier, the first such contraction since 2013, as import quota shortages, refinery maintenance and rising global prices curbed buying.
“Imports were scaled back as surging prices for crude oil have eroded refinery profit margins,” Eurasia Group said in a note.
Lending support to the market, U.S. stockpiles of oil and gasoline inventories fell last week, according to two market sources on Tuesday, citing figures.
Crude inventories declined by 4.1 million barrels for the week ended July 9, the sources said.
If confirmed on Wednesday when the Energy Information Administration (EIA) releases its weekly data, the draw would mark a seventh consecutive week of inventory declines.
The International Energy Agency said global withdrawals from storage in the third quarter were set to be the most in at least a decade, pointing to early June stock draws in the United States, Europe and Japan.