Oil dips as supply concerns linger and OPEC+ sticks to policy

© Reuters. FILE PHOTO: Oil pump jacks are seen at the Vaca Muerta shale oil and gas deposit in the Patagonian province of Neuquen, Argentina, January 21, 2019. REUTERS/Agustin Marcarian/File Photo

By Noah Browning

LONDON (Reuters) - Oil prices dipped in volatile trading on Thursday as concerns over global supply appeared to outweigh a build in U.S. fuel product inventories as OPEC+ decided stick to its measured output strategy.

Brent crude futures for September, the more actively traded contract, were down 96 cents, or 0.9%, at $111.49 a barrel by 1225 GMT. The August contract, which expires on Thursday, was down 78 cents, or 0.7%, at $115.48.

U.S. West Texas Intermediate (WTI) crude futures fell $1.25, or 1.1%, to $108.53.

The OPEC+ group of producers including Russia, on Thursday agreed to stick to its output strategy after two days of meetings, sources told Reuters.

Sanctions on Russian oil since Russia's invasion of Ukraine have helped to send energy prices soaring, stoking inflation and recession fears.

Crude inventories fell by 2.8 million barrels in the week to June 24, U.S. Energy Information Administration data showed, far exceeding the 569,000 barrel drop forecast in a Reuters poll of analysts.

However, fuel stocks rose as refiners ramped up activity, operating at nearly full capacity, the highest at this time of year in four years.

"The net drop in crude oil inventories was flattered by SPR (Strategic Petroleum Reserve) releases, while the gasoline stock jump is because U.S. refineries are running at over 95% capacity," said Jeffrey Halley, OANDA's senior market analyst for Asia Pacific.

But further disruptions to supply could limit price declines amid a suspension of Libyan shipments from two eastern ports while Ecuador output fell because of ongoing protests.

Exports of Ecuador's Oriente crude remain suspended under a force majeure declaration as the spread of anti-government protests hurt oil output, state-run Petroecuador said on Wednesday.