Oil falls as bulls discount Opec cuts, set for worst H1 since 1997

LONDON — Oil steadied on Wednesday, paring earlier losses, but was set for its largest price slide in the first half of any year for the past two decades, as investors discounted evidence of strong compliance by major producers with a deal to cut global output.

August Brent crude futures were flat at $46.02 a barrel by 1107 GMT, having fallen earlier to sevenmonth lows. US crude futures for August delivery were up 4 cents at $43.55, having hit their lowest since September on Tuesday.

So far this year, oil has lost 20 per cent in value, its worst performance for the first six months of the year since 1997.

Compliance with an agreement by the Organisation of the Petroleum Exporting Countries and other producers to cut output by 1.8 million barrels per day from January reached its highest in May since the curbs were agreed last year. “The slide in oil prices seems to be unstoppable,” said Julius Baer commodities research analyst Carsten Menke.

“The supply deal’s effectiveness is increasingly questioned. We believe that downside risks to oil prices from a (disorderly) and early unwinding have risen ... we still see prices trading sideways, spending more time in the high 40s than the low 50s as growing shale output and stagnant western-world oil demand undermine the Middle East’s restriction efforts.”

Data from the American Petroleum Institute on Tuesday showed US crude stockpiles last week had dropped more than forecast. Gasoline and distillate inventories rose.