The prices of oil slipped on Wednesday due to the high amount of supplies regardless of OPEC’s production cut.
Futures contracts for the international benchmark for oil prices, Brent crude traded down 14 cents at $55.44 per barrel.
Futures contracts for U.S. West Texas Intermediate traded down 7 cents at $52.74 per barrel.
According to traders, this was the result of a reported rise in U.S. crude inventories.
Jeffrey Halley, senior market analyst future brokerage OANDA in Singapore said that “The release of the American Petroleum Institute's crude inventories at a much higher than expected 5.8 million barrels saw both Brent and WTI quickly give back... gains.”
The API data revealed that commercial U.S. crude inventories are at 488 million barrels.
The increasing supply of U.S. crude is being cancelled out by an effort by the Organization of Petroleum Exporting Countries (OPEC) in order to spur the market and end the global oversupply of crude oil.
As part of this, OPEC has stated it will reduce production by about 1.2 million barrels per day (bpd) in the first half of this year. Promising to reduce their output to another 600,000 barrels per day are countries including Russia.
Chief market strategist at futures brokerage AxiTrader, Greg McKenna, said: “That's a good start ... to cut production to bring the market back toward balance.”
McKenna added that there were still “some questions about whether or not OPEC will achieve its goals” to cut even further for the whole period of the first half of 2017.