Oil fell after Kuwait workers said they would end a strike that disrupted output in OPEC’s fourth-largest producer for three days.
Futures fell as much as 2.5 percent in New York. Prices gained 3.3 percent on Tuesday, the first advance in five days, after the protest reduced Kuwait’s production by as much as 1.7 million barrels a day. U.S. inventories probably increased by 3 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report Wednesday. That compares with industry data showing a 3.1 million-barrel gain.
Talks in Doha on Sunday between the world’s largest producers about capping production failed after Saudi Arabia insisted it wouldn’t restrain output without commitments from other major producers including Iran, which has ruled out freezing for now. Workers in Kuwait went on strike to protest cuts in pay and benefits as Middle Eastern crude exporters reduce subsidies and government handouts amid the collapse in prices.
“The size of the disruption, had the strike persisted, would have been quite significant,” Ric Spooner, a chief market analyst at CMC Markets in Sydney, said by phone. “It took quite a lot of oil out of production.”
Cushing Stockpiles
West Texas Intermediate for May delivery, which expires Wednesday, dropped as much as $1.02 to $40.06 a barrel on the New York Mercantile Exchange and traded at $40.11 by 11:35 a.m. Singapore time. Prices on Tuesday rose 3.3 percent to $41.08 a barrel. Total volume traded was about 30 percent above the 100-day average. The more-active June contract fell 95 cents to $41.52 a barrel.
Brent crude for June settlement fell as much as 88 cents, or 2 percent, to $43.15 a barrel. The front-month contract on Tuesday gained 2.6 percent to settle at $44.03. The global benchmark traded at a $1.63 premium to June WTI.
Kuwait’s workers will resume their jobs on Wednesday out of respect for the country’s emir after successfully showing the importance of their role in the economy, KUNA, the country’s official news agency said, citing a labor union statement. The stoppage of the strike comes soon after Anas Al Saleh, the acting oil minister, said on Alrai television the government wouldn’t hold talks with workers as long as the walkout continued.
Other oil-market news:
Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest U.S. oil-storage hub, dropped by 235,000 barrels last week, the American Petroleum Institute was said to report. Russia’s oil output, shipments may rise as the country is freed from a plan to coordinate output with OPEC members. Daily production may increase by 100,000 barrels to 10.81 million in 2016, according to Deputy Energy Minister Kirill Molodtsov.
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